Preamble

The House met at half-past Two o'clock

PRAYERS

[MR. SPEAKER in the Chair]

Oral Answers to Questions — HEALTH

Prescribing Costs

Mr. Carttiss: To ask the Secretary of State for Health how prescribing costs under the proposed National Health Service changes will be monitored.

The Secretary of State for Health (Mr. Kenneth Clarke): Under the indicative drug budget scheme, practices will be able to monitor their own expenditure on drugs by means of a simple monthly statement from the Prescription Pricing Authority.

Mr. Carttiss: I thank my right hon. and learned Friend for his reply. Has he seen the circular letter sent to local medical committees by the hon. Member for Peckham (Ms. Harman), repeating the Opposition claim that drug budgets will be cash limited? As the hon. Lady declines to recognise the repeated assurances that that is not so, will my right hon. and learned Friend take this opportunity to reiterate that drug budgets will not be cash limited, and that no patient will go without necessary drugs?

Mr. Clarke: We demonstrate repeatedly to the British Medical Association and to the hon. Member for Peckham (Ms. Harman) that indicative drug budgets will not be cash limited and that every doctor will be free to prescribe whatever drugs a patient needs for his or her condition. The hon. Lady continues not to produce any evidence for her contrary assertion, but she keeps making it. Therefore, I intend to write to all local medical committees yet again, refuting her suggestion and giving reasons, if I can persuade the British Medical Association to give me the addresses of the local medical committees to which she wrote.

Ms. Harman: Will the Secretary of State please investigate the case of David Whitton, a former chairman of the Royal Free hospital kidney patients association, who had to change his general practitioner because his GP would not prescribe for him cyclosporin, an expensive drug which he needs to keep his transplant in place? Will the Secretary of State acknowledge that cash-starved hospitals are passing on to GPs expensive drug costs? How will patients get the drugs that they need when GPs' drugs budgets are capped under the National Health Service and Community Care Bill?

Mr. Clarke: I shall look into that case, as I look into all the cases that the hon. Lady refers to me. So far, not one

of the cases that I have looked into has justified the particular assertion that she made on the Floor of the House. Certainly, I disapprove of the attempt by some hospitals to shift the prescription of drugs for which their consultants are responsible on to GPs. A GP has no budgetary reason for refusing to dispense a drug, but some of them are quite correct in insisting that they will riot prescribe drugs when a consultant continues to be responsible for the patient. I shall look into that case and see whether it gives rise to some cause to intervene.

Mr. Brandon-Bravo: Does my right hon. and learned Friend agree that no practice or doctor objects to the monitoring that is suggested? Does not he deplore the conduct of Opposition politicians and, sadly, unprofessionally, some doctors who are still frightening the life out of elderly and disabled people by telling them that the drug budget will stop them having the drugs that they need? Will he nail that lie once and for all?

Mr. Clarke: I agree with my hon. Friend. Most doctors already prescribe responsibly. The vast majority welcome the introduction of the information system known as PACT—prescribing analyses and cost—which tells them what they are spending now, and most will welcome the opportunity to monitor their own drug spending. I have already refuted the ridiculous allegation that patients might not get the drugs that they need, on grounds of expense. I continue to insist that in a minority of practices there is a sensible case for tackling avoidable and unnecessary costs in prescribing—perhaps they are dispensing drugs that are not needed by the patient, or expensive drugs when cheaper ones are available. The savings made by extending good prescribing practice will be ploughed back into the National Health Service to help improve services.

Cervical Cancer Screening

Mr. Norman Hogg: To ask the Secretary of State for Health if he will make a statement on cervical cancer screening.

The Minister for Health (Mrs. Virginia Bottomley): The cervical screening programme forms an important part of our strategy to promote women's health. Between 1978 and 1988 deaths from cervical cancer in England and Wales fell by 10 per cent. to under 2,000 women per year and the death rate per million women aged 20 to 74 years fell by 16 per cent.

Mr. Hogg: Is the Minister aware that about 90 per cent. of the 2,000 deaths that occur each year could be avoided by a proper and effective screening service? What positive steps is she taking to ensure that her Department is providing an effective screening service? What improvements are there in uptake, and what is the hon. Lady doing to ensure that women at risk are aware of the services that are available?

Mrs. Bottomley: I entirely endorse the hon. Gentleman's point about the importance of the cancer screening programme. Regular screening can prevent deaths. We were the first country in Europe to introduce a national call and recall scheme for cancer screening. Great headway has been made with the scheme, but we are determined to improve on delays or difficulties in its implementation. Great successes have been achieved


already and under the new contract we expect general practitioners to achieve targets, to ensure that they are proactive in encouraging women to realise the importance of health promotion and of having the test.

Mrs. Maureen Hicks: I have some of the most conscientious doctors in my constituency, but is my hon. Friend aware of the concern among many doctors, particularly in deprived areas, about encouraging people to come forward, to help them reach their targets? What should my message be to doctors who fear that there will be no incentive if they do not reach their targets?

Mrs. Bottomley: I hope that my hon. Friend will make it clear to those general practitioners that the payment for screening is part of the capitation fee. The intention of the target is to encourage doctors to go out of their way to help those who might not have realised the importance of screening tests. The lower target of 50 per cent. is achievable by most; the 80 per cent. target will be more of a challenge, but often health needs are highest in precisely the areas where there is a challenge.

NHS Trusts

Miss Hoey: To ask the Secretary of State for Health what representations he has received on the staff ballot in the West Lambeth health authority on the establishment of a self-governing trust.

Mr. Kenneth Clarke: I have received two letters on the matter, including one from the hon. Member.

Miss Hoey: As the Secretary of State's attempts to use cuts to persuade hospitals to opt out were repudiated by 80 per cent. of the staff at St. Thomas's voting against opting out last week, will he take immediate steps to reverse the underfunding of West Lambeth health authority? Is he aware that next week it will be taking decisions to cut another 160 beds, to cut out-patient services and to cut the number of people who can use the accident service? Is he further aware of the strong feeling on the matter, and will he assure the House that St. Thomas's will be taken off the list of hospitals that can opt out—[HON. MEMBERS: "Too long."]—and ensure that it is not allowed to wither away from being a fine hospital?

Mr. Speaker: Order. I ask for single questions, or our proceedings will be delayed.

Mr. Clarke: That question started on a rather extraordinary premise, and I am afraid that the end of it was almost inaudible. There is no question of cuts in West Lambeth health authority. Its funding increased by 7 per cent. in real terms this year and it is treating the planned number of patients. Most people attribute its difficulties to financial mismanagement. Indeed, I have seen letters from the hon. Lady complaining about the position in West Lambeth, in which she mentioned financial mismanagement, which no doubt is why she welcomes the fact that the regional health authority has asked John Barnes to study it. No one has made an application for self-governing status, but there will be full public consultation if St. Thomas's makes such an application. We shall then consider the proposals for patient services and for better financial management.

Mr. Bowis: We have the highest regard for people working in the Health Service, but does my right hon. and

learned Friend agree that the purpose of hospitals is to benefit patients, not staff? Does my right hon. and learned Friend agree that where a hospital trust is established, it will be because the flexibility and autonomy of such a trust will be in the interests of patients?

Mr. Clarke: I agree with my hon. Friend. Only one judgment should be made on an application for NHS trust status—whether the application is in the interests of the hospital unit, particularly the interests of the patients and the population whom it serves. Staff views are extremely relevant and cannot be disregarded, but the proper way to test those views is to consult staff and the general public when there is a formal proposition. The ballots that are being held about propositions that are not yet forthcoming are somewhat pointless.

Mr. Robin Cook: Why does not the Secretary of State admit that he cannot sell the idea that their hospitals should go it alone? Is not he aware that it is not just West Lambeth, but there have now been dozens of ballots of staff and of patients, and that he has not won a single one? Is he aware that the average "No" vote across the London hospitals is 89 per cent? Is it not time that he paused to reflect that it is just possible that nine out of 10 people who work in the Health Service are right and that it is just possible that he might be wrong? Why, therefore, does he not now—[HON. MEMBERS: "Ask a question."] I am asking a question. If hon. Members will wait, I shall ask the question and I should prefer it if the Secretary of State would answer. Is it not time that the Secretary of State dropped his deeply unpopular proposal to make hospitals opt out, which the next Labour Government will reverse?

Mr. Clarke: The hon. Gentleman is a bit stuck to find anything to say about National Health Service policy as he has no policy of his own and he is rather repeating his comments last week about our policies at great length. The fact is that we do not yet have any propositions for self-governing hospitals and NHS trusts. When we accept firm applications, we shall have proper public consultations, setting out the pros and cons for patient services, for staff interests and for everything else. There have been places where the staff have voted in favour of being interested in self-governing status, but sensible judgments can be made only after proper public consultation on a serious proposition. For the hon. Gentleman to run ballots or to start saying that he will repeal all my proposals—because after two years he still cannot think of any of his own—is not, at this stage, to make a sensible contribution to events.

Mr. Speaker: I again appeal to the House to ask single questions. We then get briefer answers and proceed with greater speed down the Order Paper.

Voluntary Groups

Mr. Knapman: To ask the Secretary of State for Health what assistance is being given to voluntary groups working with under-fives.

Mrs. Virginia Bottomley: The Department provides grant aid of about £1 million a year to national voluntary organisations that are active in the under-fives area. This year, we have given a further £425,000 to seven national organisations that have distributed small grants to local


projects providing services to pre-school children and their families. We have also launched the £2 million new under-fives initiative to test out various new policy ideas.

Mr. Knapman: I am obliged to my hon. Friend for her reply and for her consistent encouragement of pre-school play groups and the carers for under-fives. Has she any intention of introducing inspection charges or registration fees for those groups?

Mrs. Bottomley: The Pre-School Playgroups Association receives the largest amount of support from my Department. It is receiving more than £500,000 this year. Under the Children Act 1989, it is necessary for the 17,000 pre-school playgroups to register. We have made it clear that the charges will be modest and we hope that they will be no more than £10.

Mr. Andrew F. Bennett: What discussions are Health Ministers having with Education Ministers and the Chancellor of the Exchequer to try to ensure that there is provision across the board for under-fives, so that parents have a choice between playgroups, nursery schools or classes, day nurseries and workplace nurseries and can use what is most appropriate for their family needs and for their children?

Mrs. Bottomley: I welcome the hon. Gentleman's commitment to a mixed economy of care for the under-fives, which is precisely the Government's policy. Ninety-one per cent. of three and four-year-olds in this country attend some education or day care provision and this country is among the leaders in the European Community. We shall seek to encourage a range of providers to meet the needs and expectations of those children and their parents.

Cot Deaths

Mr. Hayes: To ask the Secretary of State for Health when he expects the results of the research into a possible link between fire retardant materials and cot death syndrome to be available; and if he will make a statement.

The Parliamentary Under-Secretary of State for Health (Mr. Roger Freeman): On 9 March, the Department's chief medical officer, Sir Donald Acheson, announced that he had asked a group of independent experts to investigate a claim that the emission of toxic gases from fungal growth on some cot mattresses is a cause of sudden infant death. He has asked the group to report as soon as possible and will make public its findings.

Mr. Hayes: Will my hon. Friend tell the House what advice he gave to parents during the inquiry? Does he agree that if there was a lesson to be learnt in his Department from listeriosis, it is that the public must be warned at the earliest opportunity of any risk to their health or, of course, that of their children?

Mr. Freeman: I agree with my hon. Friend. There is a sad number of cases—some 1,500—of sudden infant deaths each year. The advice of the chief medical officer, issued on 9 March, was clear: keep young babies warm but not overheated; give children good ventilation in their rooms and keep bedding fresh and clean.

Rev. Martin Smyth: Have not scientists in the Department of Trade and Industry already issued warnings on this issue? Why has the Department of Health been slower in bringing forward such advice?

Mr. Freeman: I am not sure that I can agree with the hon. Gentleman. I understand that the laboratory of the Government chemist could neither prove nor disprove the conclusions of the independent consultant chemist. That is why the chief medical officer has set up an independent and fresh team to review the evidence and advise urgently.

Marriage Registrations

Mrs. Currie: To ask the Secretary of State for Health what representations he has received about his plans to bring forward legislation to reform the law affecting the registration of marriages.

Mr. Freeman: There has been a widespread welcome for the proposals in the White Paper, "Registration: Proposals for Change", which was published at the end of January. There is particular public support for the introduction of greater choice over where a civil marriage may take place.

Mrs. Currie: Given that the discrimination against marriage was removed by the previous Chancellor in his Budget two years ago and given that all of us—married and single—expect great things of his successor this afternoon, would my hon. Friend like to tell me when people will be able to get married in a hotel, on a hillside or in some other place of their choice?

Mr. Freeman: I am sure that, while paying tribute to my hon. Friend for introducing the Green Paper over a year ago when she held my present position, the House will agree that civil marriage is a serious ceremony. I can tell the House that the Secretary of State will seek to introduce a Bill during this Parliament.

Mr. Key: I congratulate my hon. Friend and his ministerial colleagues on an excellent White Paper. Will he consider placing a duty on local authorities to encourage the collection, storage and accessibility of public records, particularly medical records, which will become essential for epidemiological research in the future?

Mr. Freeman: I shall certainly pursue my hon. Friend's suggestion. It is proposed in the White Paper that all records of births, marriages and deaths that are more than 75 years old should be available for research and open to all members of the public.

NHS Unions

Mr. Skinner: To ask the Secretary of State for Health what recent discussions he has had with National Health Service trades union representatives; and if he will make a statement.

Mr. Kenneth Clarke: Ministers in my Department have frequent meetings with NHS trade union representatives on a variety of subjects. There were four such meetings last month and I personally met the TUC health services committee on three occasions last year.

Mr. Skinner: Why does not the Secretary of State for Health go to Mid-Staffordshire and speak to Health Service union representatives there? Why does not he


explain to them how he manages to combine cutting the National Health Service and opting out? Why does not he explain to ambulance workers up there in Mid-Staffordshire why he is prepared to offer them only 6·5 per cent., when company bosses got 28 per cent. last year?

Mr. Clarke: My hon. Friend the Minister for Health went to Staffordshire yesterday and tells me that she had an excellent reception. As far as I am aware—and despite the efforts of the hon. Member for Livingston (Mr. Cook), no doubt—health is not a seriously controversial issue in Staffordshire, because the record of advance, in terms of the money spent, the patients treated and the new hospital building already achieved and proposed, has been outstanding. The idea that we can have a serious political argument on the basis that everything that is wrong with the Health Service is the result of underfunding, when we have increased spending on the Health Service by 20 per cent. in cash terms in two years, is nonsensical, and I am told that it has no appeal whatever to the electors of Staffordshire.

Mr. John Greenway: When my right hon. and learned Friend next meets the representatives of the Health Service unions, will he point out to them that there are more people working in the Health Service than ever before and that they are being paid more than ever before? That is a record which the Labour party never could and never will sustain.

Mr. Clarke: The Labour party achieved that record only for some groups of staff who had a habit of going on strike to achieve a higher pay claim. The Labour party reduced in real terms pay of nurses throughout its last six years in office and penalised all those who showed the most dedication to their patients. We have a much better record than our predecessors, in terms of the number of staff employed, their remuneration and making better use of their services to the best advantage of the patients.

Mr. Tom Clarke: When the Secretary of State next meets the unions in the Health Service, such as the Confederation of Health Service Employees, the National Union of Public Employees, the National and Local Government Officers' Association and the GMB, will he accept that their views on community care are highly progressive? As a token of accepting their views, will he ensure some ring-fencing or earmarking of the limited resources that are made available for those purposes?

Mr. Clarke: First, most of the representatives of those trade unions warmly welcome my statement of Government policy on care in the community. Their members are actively looking forward to working with us on that. Secondly, I do not believe that is a correct approach to any part of local government spending to start "ring-fencing", as the hon. Gentleman puts it, by specific grants—set sums of money for set parts of the budget. We are placing confidence in local government to discharge its full responsibilities for choosing priorities within the social service budgets, for making use of the extra funds that we shall give local authorities on quite a scale and for making its own judgment on how to make best use of community charge revenue.

Mr. Jessel: Will my right hon. and learned Friend tell the trade union representatives the excellent news that since the introduction of the waiting list money, in the past

year the waiting list for orthopaedic operations at West Middlesex hospital has dropped from 899 to 557, which is a drop of 38 per cent., while there has also been a drop of 45 per cent. in the waiting list for ear, nose and throat operations?

Mr. Clarke: I congratulate Hounslow and Spelthorne on what it has achieved, by a combination of the money that we have given it through the waiting list initiative, and good management, and by studying the causes of the long waiting lists in the first place, which were by no means all financial. I am told that one of its best achievements is that the number of people waiting for an operation for more than one year has dropped by 50 per cent. in the past 12 months. That is a considerable achievement by that health authority for the benefit of all its patients.

NHS Chief Executive

Mr. Andrew Smith: To ask the Secretary of State for Health when he next plans to meet the chief executive of the National Health Service; and what matters will be discussed.

Mr. Kenneth Clarke: Mr. Duncan Nichol has responsibility, with his management executive colleagues, for the operation and management of the National Health Service and the delivery of the objectives set for health authorities in line with Government policies and resources. I therefore keep in constant and regular touch with Mr. Nichol over a wide range of issues and usually meet him several times a week.

Mr. Smith: Will the Secretary of State ask Mr. Nichol to review urgently and sympathetically the capital funding problems facing Oxford region, specifically to enable it to proceed with the much-needed replacement of shockingly sub-standard mental illness wards at Littlemore hospital? Will he consider favourably the loan application that he has received for much-needed facilities for severely disturbed elderly people at Littlemore hospital? Is it not time that mental health received the capital investment that it deserves?

Mr. Clarke: Oxford region has an excellent record of capital investment. I agree with the hon. Gentleman that it is important that it is sustained. At the moment, we are having to consider the position in the light of the drop in the anticipated level of land sales, which has been helping to boost that programme, but I assure the hon. Gentleman that Duncan Nichol and myself will keep a close eye on that. I remind him that, for the first time, this year we have introduced a capital loan scheme. One of its first objects is to enable regions to make progress in building new facilities for mentally ill paitents, so that better facilities can replace the older mental hospitals without having to wait for their closure and sale first. I am sure that Oxford region is considering the possibility of making use of that.

Mr. Nicholas Winterton: When he next meets Mr. Nichol, will my right hon. and learned Friend ask him why, when so much additional money is being allocated to the Health Service, so many cottage hospitals are closing and why, when the Health Service is selling so much land in the Macclesfield health authority area, so little goes to Macclesfield and our hospitals and facilities are consistently being closed?

Mr. Clarke: It is the duty of Health Service managers at every level to make the most effective use of the resources at their command. Obviously, we sometimes have difficult arguments about whether a community hospital should be replaced by a facility elsewhere. I wish that, nationally and locally, people would concentrate more on the number of patients being treated and on the work being done by the Health Service, both of which have increased dramatically since we came to office. The number of in-patients being treated each year is 1·25 million greater than when we took over. That is the best measure of what is happening, both nationally and in Macclesfield.
As to land sales, I encourage management so to arrange things that most of any money raised from sales remains at local level. In that way, local management is given the incentive in making disposals. No doubt, Duncan Nichol will have a look at the particular dispute between Macclesfield and its region, which appears to lie behind the question.

Community Care

Mr. Alton: To ask the Secretary of State for Health if he will make a statement on the progress of care in the community as it applies to patients with mental illness.

Mr. Freeman: The Government have set out their proposals in the White Paper, "Caring for People". Key elements are the introduction of the care programme approach, and the specific grant to help increase the social care available for people with a mental illness, which we hope to introduce from April 1991.

Mr. Alton: Has the Minister had a chance to consider the tragic case outlined to him in a letter from me and the right hon. Member for Manchester, Wythenshawe (Mr. Morris), acting as trustees of the charity Crisis, which acts for homeless people? Does he agree that that case illustrates the real problem of discharging people with mental problems into the community? Does he accept that this policy can too easily become dumping in the community, which is in the interests neither of the patient nor of the community?

Mr. Freeman: I shall be replying to the hon. Gentleman on the specific case that he and the right hon. Member for Manchester, Wythenshawe (Mr. Morris) raised. The whole House will agree that in the past some patients have been dumped from mental illness hospitals. There is no question about that. That is why we are pursuing a number of initiatives, including this year a specific initiative aimed at the mentally ill homeless in central London—to be followed in 1991–92, I hope, by a wider national initiative. The situation is scandalous, and I agree with the hon. Gentleman that we must take firm action.

Mr. Simon Coombs: Can my hon. Friend confirm that often the best and most apporopriate quality of care for mentally ill people and mentally handicapped people is provided within the community? To that end, will he promote the citizens' advocacy schemes, which have been growing up on a voluntary basis around the country, notably in my constituency, whereby mentally handicapped people are provided with a friend, advocate and mediator with outside bodies enabling them to establish themselves more easily in the community?

Mr. Freeman: I am grateful to my hon. Friend. I am sure that the whole House agrees with him that caring for people with mental illness or handicap to the maximum possible extent in the community is a humane and civilised. policy, but there are limitations. As to advocacy I agree that it has a place, particularly for the mentally handicapped and I am grateful for my hon. Friend's support.

Mr. Frank Field: Do the Government accept that not just a few but thousands upon thousands of patients have been dumped into the community and are literally homeless? Does the Minister accept that the measures that the Government have announced, though welcome, in no way meet the crisis faced by this group? When will the Government announce the provision of adequate resources to house those who are homeless?

Mr. Freeman: I do not disagree with the hon. Gentleman's analysis. We are trying, first of all, to correct the discharge policy, and the hon. Gentleman will know of the very firm steps that we have taken.
For instance, we have indicated that we shall not permit a mental hospital to close until we are satisfied that there is proper provision for those moving into the community. As regards those who are already in the community—the homeless with a history of mental illness—I agree that in Greater London the number is probably up to 3,000. That is why we shall bring to the House shortly concrete proposals to help to address this problem.

Nurses (Pay and Conditions)

Mr. Mans: To ask the Secretary of State for Health what changes have been made in the pay and conditions of nurses since 1978–79.

Mr. Clarke: The pay of nursing staff has increased over and above inflation by an average of 43 per cent. in real terms since 1979.

Mr. Mans: Does my right hon. and learned Friend agree that in addition to the increases in nurses' pay there are many more nurses working in the National Health Service? Does not this show clearly that Opposition claims that the Government do not care about the NHS are totally false?

Mr. Clarke: I agree with my hon. Friend. We have greatly increased the number of nurses, we have hugely increased their pay, we have improved their training and, through the grading system, we have given them a better career structure. This has been one of the Government's main contributions to making the National Health Service an even finer British institution than it was when we took over.

Mr. Cousins: What action does the Secretary of State propose to take to assist the 650 nurses in Newcastle who are still waiting for their grading appeals to be heard two years after the gradings were first awarded?

Mr. Clarke: I told the trade unions that that sort of delay was inevitable. I deeply regret the fact that they did not act on my suggestion that the appeal system should be improved when we introduced the new grading structure. The unions and I were wholly agreed on the desirability of the new grading structure. I cannot understand why they insisted on sticking to an appeal procedure which is


incapable of sorting out all the individual grievances in a reasonable time. I should like to see a change in the structure to one that could sensibly handle the workload.

Mr. Dickens: I have been in two hospitals in the north-west recently as a National Health Service patient. Is my right hon. and learned Friend pleased to hear that the nursing profession in our hospitals is in extremely good shape, that morale is high and that the nurses are working as hard as ever and are worth every penny?

Mr. Clarke: I trust that my hon. Friend is in good shape as well. He appears to be in extremely good shape. I am grateful to him for his supplementary question. Nine out of 10 patients have nothing but admiration for the clinical and nursing standards achieved by the NHS. Our reforms and the additional money that we are pouring into the NHS are intended to give more power to the elbow of all those doctors and nurses who contribute so much to all those, including my hon. Friend, who need their help.

Mr. Robin Cook: Does the Secretary of State recall that the parliamentary answer to a question that I tabled showed that for eight years under the Government the number of nurses has increased by 9 per cent. compared with 14 per cent. in five years under the Labour Government? Do not those figures show which party is really committed to the Health Service? Do not they confirm that under the present Government the annual rate of increase in the number of nurses has fallen to a third of the level achieved under Labour, and to only one seventh after the reduction in nurses' hours? Do not those figures show clearly why so many hospitals now cannot cope?

Mr. Clarke: Between 1974 and 1979, the take-home pay of nurses fell by 21 per cent. in real terms. The Government have introduced an independent review body to advise us on nurses' pay and we have given them a 9 per cent. award this year. We have reduced their working week, improved their training and raised their pay on average by 43 per cent. in real terms. It is absurd for the hon. Gentleman to make such pathetic claims in respect of the Labour Government's record which was a shameful one in relation to the nursing profession.

Mr. Bill Walker: Does my right hon. and learned Friend agree that the figures that he has given show clearly that the Labour party is the party of cheap labour? It increased the number of nurses but reduced their pay whereas we have increased their pay and improved quality. The Royal College of Nursing recognises that.

Mr. Clarke: I agree with my hon. Friend. We have increased the number of nurses in the NHS, and it is plain that we shall continue to do so. By comparing records—[Interruption.]—the public should be able to make a judgment about the real concern and commitment shown by the Conservative party to the Health Service compared with that of our opponents—[Interruption.]

Mr. Speaker: Order. I ask the House to settle down. Too much private conversation is taking place.

Hospices

Mr. Malcolm Bruce: To ask the Secretary of State for Health if he will make a further statement on funding for the hospice movement.

Mrs. Virginia Bottomley: We have now issued guidelines to health authorities on the distribution of the additional £8 million that we have allocated for 1990–91 to enable them to contribute more to the voluntary hospice movement. These measures underline our commitment to the hospice movement. We very much value the standard of care that it has developed and the comfort that it has brought to the dying and their families.

Mr. Bruce: I thank the Minister for her reply. Given that 60 per cent. of all terminally ill patients are still treated in NHS general wards, that there is clearly a growing demand for hospice care and that some hospices are finding difficulty meeting their obligations, will the hon. Lady undertake to keep the situation closely under review and to increase the allocation of funds if the need arises, as many hospice organisations are saying that it will?

Mrs. Bottomley: There is a great deal of work within the National Health Service providing care for the terminally ill and the dying. Our contribution was intended particularly to give assistance to the voluntary hospice movement, which has done excellent and pioneering work in providing comfort and dignity for the dying. Certainly we hope to move towards a fairer partnership between the public support for the dying and the voluntary hospice movement.

Mr. Hannam: Will my hon. Friend confirm that some 36 new hospices are now being planned by the NHS and the voluntary sector, including one in my constituency on a site provided by the local health authority? Is not that a welcome sign of the improving co-ordination between the NHS and the voluntary sector?

Mrs. Bottomley: It is very important that the NHS and the voluntary sector plan together. That is why the £8 million is being distributed through the health authorities, to encourage better planning and the provision of dignity and proper care for the terminally ill.

Mr. Alfred Morris: Why is the matched giving for hospitals in Scotland, pound for pound of charitable funding, not available elsewhere? When will it be available in England and Wales? Is the Minister aware that more hospices could then give more help to more people at home for whom there is no residential accommodation available and that more could be done to help bereaved families, not least bereaved children?

Mrs. Bottomley: I fully endorse the points made by the right hon. Gentleman about the importance of the hospice movement, for the bereaved family and children as much as for the patients themselves. I am pleased to have been able to announce the 70 per cent. increase in public funds for hospices this year and we have made it clear that we hope that health authorities will move towards an equal partnership with the voluntary hospice movement.

Mr. Sumberg: Is my hon. Friend aware that 36 new hospices are planned in the coming year in the public and the voluntary sector and that one of them is in my constituency? Will my hon. Friend join me in congratulating the people of Bury on raising all the money to build and equip this excellent facility?

Mrs. Bottomley: I join my hon. Friend in congratulating his constituents most warmly on raising the money for that voluntary hospice. It is a magnificent example of what can be achieved for the terminally ill and the dying.

Dental Checks

Mr. McAvoy: To ask the Secretary of State for Health if he will now review his policy of charging for dental checks.

Mrs. Virginia Bottomley: The number of dental examinations has gone up gradually in recent years. We expect this long-term trend to continue. There was a slight dip in the figures for late 1989. More people than usual sought examinations just before the charge was introduced.

Mr. McAvoy: Does the Minister accept that the number of dental treatment courses taken by patients over 18 and liable to charges fell by 10 per cent. between the first and third quarters of last year? Does she accept that the charges are damaging dental care and should be withdrawn?

Mrs. Bottomley: I accept no such thing. The examination charge is £3·45 and it is right that people should make that contribution. When the Labour party was in power there were far fewer examinations. Now there are four examinations for every three that took place then.

Royal Devon and Exeter Hospital

Mr. Speller: To ask the Secretary of State for Health how many of the patients affected by an excessive dose of radiotherapy at the Royal Devon and Exeter hospital in 1988 have now received final compensation, interim compensation or no compensation to date.

Mr. Freeman: I understand that the position on 12 March 1990 was that, of the 104 claims received so far, 11 have received full and final settlement of both pain, suffering and amenity and special claims, 57 claimants have received partial settlement, and 36 claimants have received no compensation as yet.

Mr. Speller: Does my hon. Friend realise that it is two years since those people were damaged through the actions of our National Health Service? Will he accept that the pain, suffering and stress are far more than physical pain and suffering and will he do all that he possibly can on behalf of, for example, the only three of my eight constituents damaged who are still surviving, so as to get this unfortunate affair settled quickly, even if it is costly?

Mr. Freeman: I can give that assurance to my hon. Friend, who, in a recent Adjournment debate, stood up most valiantly for his constituents. I will be in touch with the district health authority and. I will do as my hon. Friend requests.

West Midlands RHA

Mr. Gill: To ask the Secretary of State for Health how many people are currently employed by the West Midlands regional health authority.

Mrs. Virginia Bottomley: The latest information is that 5,094 people were employed by the West Midlands regional health authority on 30 September 1988.

Mr. Gill: Is not that rather too many? Does my hon. Friend recognise that the Shropshire people demonstrate the finest of British traits and would welcome greater economy and independence?

Mrs. Bottomley: I fully recognise my hon. Friend's point. Good administration is necessary within the NHS, but we are seeking to devolve as many decisions as possible. That is the intent of our reforms to improve and enhance the NHS.

NHS Allocations

Mr. Beaumont-Dark: To ask the Secretary of State for Health what allowance for inflation has been made in allocations for 1990–91.

Mr. Freeman: Health authority allocations contain no specific provision for inflation. Authorities receive an overall cash allocation and are expected to manage their expenditure within that amount, together with resources released by cost improvement programmes and any additional funding—for example, towards the costs of review body pay awards. The 1990–91 allocations to regional health authorities represent an average cash increase of 9·6 per cent. over the previous year.

Mr. Beaumont-Dark: Bearing in mind the figures on inflation released by the Treasury, does my hon. Friend accept that it is difficult to believe that no allowance is made for inflation within such large sums? Indeed, we are talking about £24 billion to £28 billion. Although the sums that we give to the Health Service are large, does my hon. Friend agree that as only 3·8 per cent. was, I understand, allowed for the rate of inflation last year, another 4 per cent.—£800 million—would make a hugh difference to the hard-pressed West Midlands health authority and, indeed, every other health authority? Does my hon. Friend agree that inflation is of huge importance to the National Health Service?

Mr. Freeman: My hon. Friend is right, and the whole House awaits my right hon. Friend the Chancellor's Budget with great anticipation because keeping down inflation will help the Health Service most.

Oral Answers to Questions — PRIME MINISTER

Engagements

Mr. Pike: To ask the Prime Minister if she will list her official engagements for Tuesday 20 March.

The Prime Minister (Mrs. Margaret Thatcher): This morning I presided at a meeting of the Cabinet and had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall be having further meetings later today. This evening I hope to have an audience of Her Majesty the Queen.

Mr. Pike: Does the Prime Minister recognise that the basic unfairness of the poll tax means that thousands of people in north-east Lancashire, and millions throughout the country, will not simply be not paying, but will be unable to pay? Because of high inflation and the


Government's policy of forcing up mortgages and council house rents, the position will become worse. When will the right hon. Lady do something to help those who cannot afford to pay their poll tax?

The Prime Minister: The hon. Gentleman comes from Lancashire, where the county has set a very high community charge—indeed, far higher than the amount considered reasonable by the Government. That is being passed on to all the districts. Burnley has received £101 in safety net, so it is better off than many other areas. The taxpayer will be paying about £3 billion towards the community charge rebate and also towards transitional relief. That is an excellent amount to help those who cannot afford to pay and to help those who face a sudden increase to obtain transitional relief.

Mr. Michael Morris: Is my right hon. Friend aware that our right hon. and learned Friend the Secretary of State for Health said both today and last week that every patient would have whatever medicine he or she might need? Is she further aware that that statement is enormously welcome? However, while clause 18 on indicative budgets remains in the National Health Service and Community Care Bill, there will always be a worry that an element will be cash limited by some future Secretary of State.

The Prime Minister: I note the inherent contradiction between my hon. Friend's first sentence and his second. An indicative budget is not a rigid budget, and it is precisely for that reason that my right hon. and learned Friend has stressed that doctors will receive the amount of money necessary to prescribe what they think is best for their patients.

Mr. Kinnock: What reward does the Prime Minister have in mind for the hon. Member for Torridge and Devon, West (Miss Nicholson) who, hearing of the decision of councillors in Humberside to resign the Conservative Whip, said, "Well done them!"?

The Prime Minister: I would rather address my comments to the change in Beverley. Beverley is unfortunately in a Socialist county—[Interruption.] It has the great misfortune—[interruption.]

Mr. Speaker: Order.

The Prime Minister: Beverley is in Humberside, which has a community charge of £83 a head over what the Government consider reasonable. They are prepared to inflict that amount on all their constituents. Beverley neither contributes to nor receives a safety net. All the other districts in Humberside receive a safety net, but Beverley does not. Beverley therefore has very good reason to be dissatisfied with Socialist Humberside.

Mr. Kinnock: The right hon. Lady does not listen to anyone. If she did, she might have heard her fellow Conservative, Councillor Steve Parnaby, chairman of the finance committee of Beverley council, say that the poll tax had nothing at all to do with Labour councils. In his words the poll tax is "not right" and "not fair" and the Government
has got it [completely] wrong.
Is not that absolutely true everywhere?

The Prime Minister: People in Humberside and many other Socialist or Labour authorities are paying far more because they live in a Labour authority than they would if

they lived in a Conservative one. For example, in Conservative Barnet the community charge is £338 compared with next-door Labour Haringey's £573, Conservative Kingswood's £395 community charge is compared with next-door Bristol's £490 and Conservative Westminster's £195 compared with next-door Labour Camden's £534. The lesson is that it always costs more to live in a Labour authority.

Mr. Nelson: Is my right hon. Friend aware that there will be a widespread welcome today for the news that additional help in the form of a 30 per cent. increase in allowance will be provided for disabled students in higher education and that new allowances will be made available for their particular needs for care, personal support and equipment? Is that not further evidence that Conservative Governments can always be relied on to help most those in most need?

The Prime Minister: My hon. Friend is absolutely correct, and this adds to the excellent record of the Government with regard to disabled people. We have spent nearly double the amount over and above inflation upon those who are disabled. It is a very good example of how we may not talk so much about welfare but we do a great deal more about it.

Newcastle upon Tyne

Mr. Cousins: To ask the Prime Minister when she next proposes to visit Newcastle upon Tyne.

The Prime Minister: I have at present no plans to do so.

Mr. Cousins: When the Prime Minister next makes it up to our fine and well-run city, what hope does she expect to bring for Gemma Hayley of Blakelaw who has waited three years for a liver transplant, who cannot get it done in her own city, because, although the doctors there are trained, no money has been allocated for them to use their skills, and who has to go backwards and forwards to Addenbrookes hospital in Cambridge, and who finds budgets and figures very hard to understand because she is only six years old?

The Prime Minister: As I know well, and I expect the hon. Gentleman also knows well, that particular hospital in Cambridge is the very best, specialising in liver transplants. I do not think that anyone would complain about going there—it is a quite magnificent hospital.

Mr. Trotter: When my right hon. Friend next visits Tyneside, will she see for herself the visible signs of progress and the success story of the regeneration of our area? Will she accept that there is a new spirit of confidence in the north-east, which is better placed to face the challenge of the future than it ever has been in the past?

The Prime Minister: I agree with my hon. Friend. About a year ago I went up to Tyneside and saw the excellent amount of development that is taking place there and the much better employment position. It has a very good future. Swan Hunter has a good order for frigates, and there are many other things in the pipeline that will bring new prosperity to Newcastle—greater even than it is enjoying now.

Engagements

Mr. Douglas: To ask the Prime Minister if she will list her official engagements for Tuesday 20 March.

The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.

Mr. Douglas: Has the right hon. Lady had any time today to examine her conscience? I take it that she has responsibility for that. If she has done so, will she compare and contrast the position before the law of the Fayeds, who were able to lie and cheat to acquire substantial assets, with that of the poorer sections of the population in my constituency and other areas who, if they cannot afford to pay the poll tax—and many cannot—will be visited by state-sponsored violence in the form of poinding and warrant sales? How does that square with the right hon. Lady's conscience?

The Prime Minister: The hon. Gentleman is fully aware that if people cannot afford to pay the poll tax they will receive a community charge rebate, and an additional 20 per cent. if they are on income support, to enable them to pay the rest. That is being paid for in full by the taxpayer because many Labour authorities have overspent. The overspending by local authorities is in the order of £3 billion, and the taxpayer will be paying an extra £700 million towards community charge rebate to ensure that people do not suffer from the extravagances of Labour authorities.

Mr. Holt: Would my right hon. Friend care to know that tomorrow morning, when the people of Middlesbrough receive their community charge bill, no fewer than 24,660 of them will be in receipt of transitional relief—an average of £48 per household—at a cost of £1·2 million to the Exchequer? That type of relief is available in many parts of the country where there are low-rated houses. It is automatic and not means-tested.

The Prime Minister: I am grateful to my hon. Friend. There are two types of relief—the community charge rebate, which is means tested, and the transitional relief, which is not means tested. I understand that most of the bills that have gone out so far have included the amount of rebate that the community charge payer will receive, and also the transitional relief. That has enabled them not to be worried about a charge that otherwise might have caused them some concern.

Mr. Alton: To ask the Prime Minister if she will list her official engagements for Tuesday 20 March.

The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.

Mr. Alton: With Estonia about to follow Lithuania in demanding the right to self-determination, will the Prime Minister take this opportunity to emphasise to President Landsbergis and to President Gorbachev our country's commitment to the Baltic peoples' right to self-determination in the face of sabre-rattling and intimidation? Will she commend the people of the Baltic states for their courage and resolve?

The Prime Minister: As the hon. Gentleman is aware, we have never recognised the legal annexation of Estonia, Latvia and Lithuania. We recognise especially that Lithuania has expressed the wish to determine her own future. We hope that the position will be satisfactorily resolved between those who express that wish and President Gorbachev—so that the people of Lithuania may have their wish.

Mr. David Evans: Does my right hon. Friend agree that the community charge, or service charge as it is known in Welwyn Hatfield, is a bargain, as only 25 per cent. is paid by each individual towards its cost? Is not a 75 per cent. discount a bargain?

The Prime Minister: Where local authorities are spending to the amount that the Government consider to be reasonable, their community charges are usually reasonable. If people cannot afford to pay, they will get rebates. The community charge has brought relief to many people who live alone, who were paying high rates and who now, for the first time, have fairness and justice in paying only one community charge, which is often a good deal lower than the amount of rates that they would otherwise pay—[Interruption.]—as is clear from many letters in The Times in recent months on this subject.

Mr. Salmond: To ask the Prime Minister if she will list her official engagements for Tuesday 20 March.

The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.

Mr. Salmond: Is the Prime Minister aware that the Government have suffered yet another opinion poll setback in Scotland, this time from a BBC pre-Budget survey of Scotland's top 200 companies showing that only a quarter of them believe that the Government are sympathetic to Scottish interests? Is the right hon. Lady aware that that means that Scotland's top companies have joined the rest of the community in concluding that the Government's economic policy in general and the Budget this afternoon in particular will be dictated by economic conditions in the south of England without reference to the needs of the rest of the country?

The Prime Minister: This Government, like our Conservative predecessors, have looked after the needs of Scotland particularly well. We are well aware of the pride of Scotland and how much the Scottish people consider everything Scottish, and therefore we have given them far more per head in expenditure than has been given to England and Wales.
I looked at recent polls on the economy. A recent one in The Independent made it clear that twice as many voters would expect the economy to be weaker under Labour, that twice as many people would expect taxes to go up under Labour, and that twice as many people would expect prices to rise faster under Labour. That was a very good write-up for Conservative Government.

WAYS AND MEANS

Budget Statement

Mr. Deputy Speaker (Mr. Harold Walker): Before I call the Chancellor of the Exchequer, it may be for the convenience of hon. Members if I remind them that, at the end of the Chancellor's speech, copies of the Budget resolutions will be available to hon. Members in the Vote Office.

The Chancellor of the Exchequer (Mr. John Major): The Government's economic policy has two main objectives. The first is to bring inflation down again. Until that happens, we cannot reduce interest rates and keep them down. The second is to enable this country to take the opportunities of the 1990s. In western Europe, the single market is nearly on us. And the whole of eastern Europe, where there is great good will for Britain, has opened up in a most dramatic way. We need to make sure that British business can take advantage of these changes.
These two objectives are closely related. Unless we succeed in the first, we are unlikely to do so in the second. Therefore this Budget will take no risks with inflation. It will maintain a strong fiscal surplus. It will, above all. be a budget for savers. It will provide a range of incentives to save and a novel incentive to give. It will bring the introduction of independent taxation for married women. It will introduce important new measures for business and keep up the pace of supply side reform. It will remove an old grievance from the tax system and make the social security system fairer, and it will abolish two taxes.
In framing the Budget, I have had the great advantage of the fiscal reforms of my predecessor, my right hon. Friend the Member for Blaby (Mr. Lawson). He has left the public finances stronger than at any time in living memory and he was also the architect of as comprehensive a tax reform as any other Chancellor this century. That will be an enduring record.
I will come to the detailed measures later. First, I wish to review the performance of the economy in 1989 and look at the prospects for 1990; I will then deal with monetary policy and public sector finances. As usual, the Red Book, together with a number of press releases filling out the details of the Budget measures, will be available from the Vote Office as soon as I have sat down.

ECONOMIC PERFORMANCE AND PROSPECTS

First, the economic background. The year 1989 saw continued buoyant growth in world trade despite some slowdown in the main economies, particularly in the United States. However, increased inflation and fears of overheating in continental Europe led to higher short-term interest rates in most major economies during the year. More recently, we have seen a rise in long-term interest rates—particularly in Germany, where uncertainty about the effects of unification has been an additional factor.

This general tightening of monetary policy is likely to mean lower growth in 1990 than last year and, in due course, a fall in inflation. We are likely, therefore, also to see slower growth in world trade in the current year, although the astonishing developments in eastern Europe improve the longer-term prospects.

High interest rates also reflect very strong investment growth over the last two years in all the major industrialised economies. This rise in investment is to be welcomed—and indeed may be intensified by the emerging investment opportunities in eastern Europe—but it also emphasises the need for a healthy level of savings to finance it.

The need for higher saving is greatest in the United States and the United Kingdom, where the shortfall is reflected in current account deficits, whereas in Japan and Germany domestic savings have remained more than sufficient to finance their own investment. In the medium term, the United Kingdom's savings and investment need to come closer into line and we must ensure this occurs through a rise in savings rather than a fall in investment.

During the last year, business confidence in Britain has remained a good deal stronger than many expected. New businesses have outnumbered closures, by around 1,500 every week; a larger figure than we expected and a record never before approached. Employment has continued to rise, and unemployment to fall. Almost 27 million men and women are in work today—a larger number than ever before and 1·5 million more than at the beginning of the 1980s. Business investment has risen by a further 9 per cent. in the last year, making a total rise of 40 per cent. over three years and taking it to its highest level ever, and a great part of this investment has been financed from rising company profits. In the last few years, profitability has recovered to the levels of 20 years ago.

As companies have become profitable, they have been investing in more than just plant and machinery. Their spending on research and development has also risen in real terms by almost 50 per cent. in the five years to 1988. They now spend over £5,000 million a year on research and development, nearly all of which is allowable against tax. Similarly, in the five years up to 1989, the numbers of employees receiving training has increased by over 70 per cent.

These are all favourable developments which reflect well on businesses' preparation for the future, but recently, they have been accompanied by the return of inflationary pressures. That, beyond any doubt, is the most urgent problem before us today. To a degree, it is a problem common to all nations. Since its low point in 1986 and 1987, inflation has risen significantly throughout the Group of Seven—the leading economies of the western world—but our affliction has been sharper. There are a number of reasons for this—some welcome and some not. The record rise in business investment is obviously welcome; but it has been accompanied by a rapid growth in borrowing and in consumer spending. Thus, investment has been rising but the savings to finance it have not. This has led to excessive growth in domestic demand, a revival of inflationary pressures and a current account deficit, a good deal of which itself represents suppressed inflation.

Policy was therefore tightened, and interest rates have now been in double figures for 20 months. This tight monetary policy has been backed by large Budget surpluses throughout the last three years. So monetary and fiscal policy have acted together.

Squeezing out inflation is always difficult, but there is now clear evidence that demand is slowing down. High street sales are now only 2 per cent. up on a year ago. The housing market has cooled off noticeably. New car and


vehicle registrations are down, and import growth has been sharply reduced. As demand has fallen back, so has output growth, to just over 2 per cent. in 1989.

No one likes to see the economy slow, but it is inevitable if we are to push inflation downwards. I now expect the economy to grow by only 1 per cent. this year, compared with the above-trend growth of 4·5 per cent. in 1987 and 1988. The size of this slowdown shows the extent of the downward pressure on inflation. But growth should return in 1991 towards its sustainable rate of around 2·75 per cent.

I am confident that the period of low growth will be short-lived—not least because of the permanent improvements in in the underlying economy in the 1980s. For example, investment has grown more than twice as fast as consumption over the last eight years. As this additional capacity comes fully into use, inflationary pressures will lessen and more growth will resume. No one need have any doubt about that.

Last year also saw a record level of foreign direct investment into Britain. Overseas investors see the potential for investment in this country in the 1990s. These investments are particularly welcome as they are in industrial sectors like cars and electronic goods, where a high proportion of the output is traded. For example, Britain already runs a trade surplus in colour television sets, and by the mid-1990s there will be a dramatic improvement in the trade balance on cars.

Increased investment will enable British industry both to meet domestic demand and to respond to export opportunities. Indeed, that is already beginning to happen. The current account deficit for 1989 as a whole was over the £20 billion I forecast at the time of the autumn statement, but the deficit in the last three months was substantially lower than in the previous quarter and, in particular, the manufacturing deficit is now improving. Exports have been growing faster than imports since the early autumn.

The reason for this improvement is twofold. In recent years, rapidly expanding domestic demand sucked in imports to meet a market that fast-growing manufacturing output simply could not satisfy. Moreover, that same demand absorbed British goods that would otherwise have been exported. This pattern is now reversing.

Exports are now growing rapidly, regaining the share of world markets they lost in 1988. Last year, the volume of exports of manufactures grew by 11·5 per cent.—the highest recorded rate for nearly 20 years. So British industry is responding extremely well to export opportunities. The fact that it is doing so clearly shows that the present trade deficit is not caused by poor industrial competitiveness. It is caused by excess demand, and as that is reduced, the current account deficit will fall—initially to £15 billion in 1990 and further thereafter.

But we cannot afford to relax policy, notwithstanding the prospect of lower growth. The buoyancy of past demand means that inflation has been far more stubborn than anyone expected. A significant fall is still some months away, and a number of factors will mean that the position will worsen noticeably before it improves. That will be reflected in the retail price index during the next few months.

The largest single factor is the increase of some £5,000 million in local authority revenue spending next year. This is mainly responsible for the expected growth of more than 30 per cent. in average community charges compared with

domestic rates. This will add more than 1 per cent. to the retail price index next month. Similarly, the further rise in mortgage rates last month will also increase the retail price index.

As a result, I now expect that retail price index inflation may still be a little over 7 per cent. by the fourth quarter of this year, compared to the 5·75 per cent. I had previously expected. Beyond that, as the effects of these one-off increases drop out and the lagged effect of monetary tightening builds up, I expect inflation to fall below 5 per cent. during 1991.

To summarise, the economy—both consumption arid investment—has been very resilient in recent years. Adjustment so far has been gradual, but this is not necessarily a good guide to the future. The gradual adjustment may continue, but equally, the downturn may become quite sharp. It is against that uncertaiin background that I must set monetary and fiscal policy, to which I now turn.

MONETARY POLICY

I want to deal with monetary policy and interest rates first, for two reasons: because they are of great concern in the House and in the country, and because, as always, they provide the key to progress on inflation. I repeat, my first priority is to prevent inflation from entrenching itself, for inflation is immensely damaging socially as well as economically. It damages business by undermining planning and investment and it foments industrial strife—and, socially, it penalises the weakest most.

I know that high interest rates are unpopular. They are generally most unpopular as they become most effective. They discourage spending and borrowing. They act directly on the things we have to control if we are to get inflation down. Interest rates are also the most flexible way of responding to what can be a rapidly changing situation. They can be raised quickly when necessary, and they can be reduced just as quickly when it is safe to do so.

In recent months, I have looked carefully to see whether there is any effective alternative to interest rates. I have done so because I am very conscious of the burden they place on business and on individuals purchasing their own homes.

I know that many people favour direct controls on lending, hire purchase and consumer credit. I understand that. In particular, I understand the distaste many people feel for the widespread marketing of credit that is so evident today and that is characterised by indiscriminate mail shots encouraging people to borrow. I believe that the financial institutions would be wise to reconsider their policy, and I hope that the subject will be covered in the code of practice the banks and building societies are currently preparing following the Jack report.

However, having looked at the matter, I have concluded that it is extremely unlikely that credit controls would work in the modern world in anything other than the very short term. They were becoming less and less effective even before exchange controls were abolished over 10 years ago. Their main impact now would be to replace domestic borrowing with overseas borrowing. These days it would, for example, be a simple matter for any high street bank to arrange its lending through an overseas branch.

That, of course, applies to other countries too, and it is for that reason that Governments of all persuasions


throughout the western world are abolishing credit controls and are relying on interest rates to control money, and thus inflation. The same is true of those countries in eastern Europe which are seeking to adapt to the market system.

In recent years, financial markets have become more open to competition, and their behaviour has changed enormously. As a result, monetary conditions have become more difficult to judge. This is one of the problems of financial deregulation, but one that must be set against the benefits that it has brought.

Therefore although monetary policy remains the key to controlling inflation, it is not realistic to suppose that we can take decisions solely by reference to the way any one particular measure of money is growing. In a more sophisticated world, we must apply judgment and take into account the other evidence about monetary conditions that may be available.

In recent weeks, I have looked afresh at the role of monetary targets. Having done so, I am clear that it is sensible to retain a target for narrow money, and that this is best measured by the familiar aggregate M0. Since this is essentially notes and coin, it clearly is not a comprehensive measure of money in all its uses, but it does have value as an indicator of transactions and has been a reliable guide for many years. For next year, I have set the target range at 1 to 5 per cent. Although the growth of M0 has fallen from its earlier peaks, it is likely to start the year above the range, and it may be some months before it falls within it.

In this re-examination of policy, I have also looked closely at the case for reintroducing a target for broad money. I can understand why some favour this. At times, broad money has given a useful indication of the build up of inflationary pressure. The difficulty is that its message has always varied in quality: its growth can represent money that is about to be spent, or money that is very definitely being saved: savings which I wish to encourage, as will become apparent later this afternoon. Although we will monitor M4 carefully, and give it weight in our decisions, I do not intend to set a target for the year ahead.

I have also reviewed whether there should be any changes in the Government's funding policy. The objectives must be to manage public debt in a way that supports monetary policy in bearing down on inflation, without distorting financial markets. I have concluded that, in general, policy should continue to be guided by the funding rule followed in recent years, with the public sector avoiding sustained under or overfunding.

However, I am also clear that, in practice, the rule cannot and should not be operated rigidly. In particular, in recent years there has been an increase in the size of the Treasury bill issue, largely as a result of a change in the financial position of local authorities. I therefore announced to the House on 15 February a range of measures intended to limit local authority borrowing from the Public Works Loan Board. This change should, in due course, allow a reduction in the Treasury bill issue, but in the meantime, the Government will adjust their funding operations if necessary, increasing gilt sales or reducing gilt purchases, to take account of the overall situation in the money market.

Progress on reducing inflation is also a vital precondition of our commitment to take sterling into the exchange rate mechanism of the European monetary system. Our commitment to do so was set out at Madrid.

It remains firm, and the conditions for entry remain unchanged. When we join the exchange rate mechanism, it will provide a new framework for interest rate decisions, but even then, no one should suppose it will bring a dispensation from the need for strong domestic monetary control—indeed, quite the reverse. Commitment to the one will reinforce the commitment to the other.

To sum up, interest rate decisions will continue to be made on the basis of the growth of monetary aggregates, and a range of other evidence, most notably the exchange rate. This matters because it provides important information about domestic monetary conditions—quite apart from having an effect on prices. Therefore, I favour a strong exchange rate. However there is, as I have made clear, no single lodestar to guide us in monetary policy. Life would be simpler if there were, but it simply does not exist, so judgment is unavoidable.

My judgment is that interest rates will stay high for some time to come. The moment I judge I can safely lower them, I shall, but to reduce them prematurely only to increase them again would be extremely damaging. When I bring them down, it will be because I believe that they are likely to stay down.

In chapter 2 of this year's Red Book, I have provided a much longer and more comprehensive account than usual of how monetary policy, including funding policy, is to be operated over the years ahead. I hope that this will be helpful to the House and, in particular, to members of the Select Committee on the Treasury and Civil Service when they come to examine the Budget documents in detail.

FISCAL POLICY

Although monetary policy must play the main role in tackling inflation, a tight fiscal policy is also essential. It cannot do the work of monetary policy, but it can and must support it. The dramatic improvement in the state of public finances over the past 10 years under the stewardship of my right hon. Friends is an achievement of which they can be rightly proud. For decades, successive Governments had spent more than they were prepared to raise honestly from taxation and they made up the shortfall by borrowing. They left that bill to be picked up by future generations. Over decades, it mounted to very considerable levels. Today, just paying the gross interest on the accumulated debt accounts for 10p on the basic rate of income tax.

Over the past 10 years, we have reversed that trend and in the past three, we have repaid around £25 billion, reducing the burden of Government debt to levels that we have not seen since before the first world war. The rewards of this repayment will be felt by future generations, but they bring also an immediate benefit. As a result of the debt repayments, we are saving over £2,500 million a year in debt interest. That is sufficient to meet the annual cost of around 150 district general hospitals.

The very large Budget surplus in 1988–89 owed much to cyclical factors. In the current year, as I told the House some months ago, we expect the surplus to fall back. The position, as usual, will remain uncertain until the year is complete, but our best estimate is that the debt repayment this year will be around £7 billion.

The fall in the surplus owes less to the slowdown in growth than to a number of special factors. We have seen a fall in privatisation proceeds from the very high level


achieved in 1988–89. There has also been a sharp and unwelcome increase in local authority spending. This has been particularly marked in their capital spending, as local authorities have sought to forestall the new controls which will take effect in April. As a result, we now expect the public expenditure planning total this year to be overshot by £2·25 billion. Central Government expenditure remains well under control.

Another, but much more welcome, factor reducing the surplus has been the higher national insurance rebates which have resulted from the huge success of personal pensions. This extension of choice is a considerable tribute to my right hon. Friend the Member for Sutton Coldfield (Sir N. Fowler). Over 3·5 million people have now taken out personal pensions. As well as benefiting the individuals concerned, in the long term this will reduce public spending, but it also reduces national insurance receipts, by £2·5 billion this year.

Next year, some of these factors will be partially reversed, but we will see the effect of slower growth on the debt repayment. In particular, corporation tax receipts are likely to fall a little after six years of rapid growth, not least because of the higher investment of recent years which can be offset against tax. These allowances will be worth more than £10 billion to companies next year, as opposed to £9 billion this year.

It is against the medium-term fiscal prospect that I have framed the Budget judgment, for fiscal policy is not, in my view, a flexible instrument which should be altered to meet short-term contingencies. Fine-tuning fiscal policy is not only disruptive to the public sector, to business, and to taxpayers, but its effects on the economy are uncertain and often destabilising.

Accordingly, I am budgeting next year for a further public sector debt repayment of £7 billion—the same as this year. Looking further ahead, I expect our fiscal position to move towards the medium-term objective of a balanced Budget—an objective that I reaffirm today.

The overall effect of the Budget measures that I shall announce today will be to maintain a tight fiscal policy by modestly increasing the yield from taxation by about £500 million next year and just under £1 billion in 1991.

BUSINESS TAXATION

I now come to the detailed measures in this year's Budget, and I shall begin with the taxation of business. Everyone in this country benefits from the success of British enterprise. Tax reform cannot create success, but it can help and encourage it. Within the tight fiscal position that I judge necessary, I am able to make some changes that should help small and medium-sized companies.

Cash flow is particularly important to new and growing companies of this size. I have two measures that should help to improve it.

At present, traders pay value added tax on all their sales, even if their customers do not actually pay the bill. They can claim VAT relief for a bad debt only when the debtor has been declared formally insolvent. As a result, the trader, who has dealt in good faith, can be out of pocket, in some cases for years, and often for large sums.

This has long been resented by businesses and the time has come to deal with it. I therefore propose that, from April next year, all debts that are over two years old and

written off in the trader's accounts will qualify automatically for relief from value added tax. This will be worth about £150 million to business next year.

I also propose to help smaller companies by simplifying the rules for traders registering for value added tax. At present, whether or not a trader has to register depends on quarterly and annual turnover thresholds. One only has to say that to realise how difficult it is. Businesses also have to peer into the future to see whether these limits might possibly be exceeded within the next year.

That complication is unnecessary, so, as from today, I propose a simple rule for VAT registration. This will be based on actual turnover in the preceding 12 months and not unknown turnover in the distant future. It will bring certainty and simplicity in place of uncertainty and complexity. It has a second benefit for businesses: because they will, in general, register later than they otherwise would have done, it will save them £35 million in 1990–91 and £75 million the year after.

I have two further value added tax changes. First, I propose to increase the VAT threshold to £25,400, a modest sum, but the maximum permitted under European Community law.

The second change will affect companies that provide accommodation for their own directors. As things stancl, the company can reclaim the VAT that they pay on this—for something that is more a fringe benefit than a legitimate business cost. Frankly, I do not believe that this generous treatment is justified. I therefore propose that VAT paid on directors' accommodation should no longer be deductible. This will take effect from Royal Assent.

I also have some changes to corporation tax. While the main rate of corporation tax will remain at 35 per cent., I propose to reduce the burden of tax for smaller companies.

At present, companies with profits below £150,000 pay a reduced rate of corporation tax of 25 per cent. I propose to raise this ceiling by one third, to £200,000. This amounts to a doubling in two years of the profits level for the reduced rate. This will be of special benefit to smaller growing companies.

For companies with profits above this limit, the average rate of tax gradually rises until their profits reach the upper profits limit of £750,000 a year. I propose to raise this limit, again by a third, to £1 million. This means that no single company will be liable for the full rate of corporation tax until its profits reach £1 million a year. These changes will mean that we will have the most favourable structure of corporation tax for small companies anywhere in the European Community.

I also have a specific tax change to help training. One of the most welcome features of the last few years has been the massive sums of money being invested in training throughout the economy by employers in both public and private sectors, large firms and small. Our estimate is that in total this amounts to £20 billion a year.

In addition, the Government are spending £2·5 billion a year on training programmes; and the value of tax relief on companies' spending must be at least as much again.

In future, over £2 billion of our public expenditure on training will be spent through training and enterprise councils, or TECs as they are known, most of which will be coming into operation over the next year. I have no doubt that TECs will do much to improve training in skills and that we shall see the benefits of this in future. They


give employers a genuine opportunity to determine their own needs and will provide generous cash help to meet them.

The Government have already promised to match local business donations to TECs pound for pound within certain limits. I now propose to encourage business to maximise the money they put into training by providing tax relief on business donations to TECs for five years until April 1995. I propose to extend the same concession to local enterprise agencies until the same date.

My next announcement has implications for one in four of the adult population, for that is the number of people—nearly 11 million—who now own shares in the United Kingdom. That remarkable figure—a new record—is published today in the annual stock exchange survey of share ownership.

Over the next few months, the stock exchange will be taking crucial decisions on its plans for a new share-dealing system, affectionately known as TAURUS. This will cut costs, eliminate paper forms, and provide a modern computerised system for transferring shares. Decisions on the design of the new systems for TAURUS will have to be taken shortly. We need, therefore, to decide what stamp duty regime to apply to paperless transactions.

As we approach 1992, we can expect even sharper international competition in financial services, much of it from other European centres. Competitive and practical arguments point in the same direction. I have therefore decided to abolish stamp duty on securities late in 1991–92 to coincide as closely as I can manage with the introduction of paperless trading. Stamp duty reserve tax will also be abolished at the same time.

Both the abolition of the tax and the introduction of a more modern dealing system will help to secure the United Kingdom's position as a leading financial centre in an increasingly competitive world market. They will also reduce transaction costs and permit higher returns for 11 million holders of occupational pension schemes, over 3·5 million personal pension holders, and the many millions of people who hold life assurance policies or unit trusts. It will also be of considerable benefit to small shareholders.

The assumption in the Red Book is that abolition will be at the end of 1991, at a revenue cost of £120 million in 1991–92. This date will be subject to confirmation later, when I have fuller information about the progress of TAURUS. However, although there is some flexibility about the timing, there is no doubt whatsoever about the decision to abolish stamp duty on shares. I have made the announcement now for two reasons: to remove uncertainty, and to make it clear that there is no need to plan for stamp duty within TAURUS. I should add, for the avoidance of doubt, that stamp duty on land and property will be unaffected by this measure.

The Finance Bill will also include a number of measures on life assurance, announced by my hon. Friend the Financial Secretary to the Treasury last December. These measures, which flow from the changes in the Finance Act 1989, followed extensive consultation with the industry. They put the taxation of life assurance companies' unit trust holdings on a sounder footing, and make a number of technical improvements. They will yield £50 million in 1990–91. A further measure will be introduced to ring-fence long-term business assets. Without this measure, there could be a significant loss of tax.

I also have a measure to announce that will clarify the tax regime for banks. Tax relief is rightly available to

banks, as it is to other lenders, for bad and doubtful debts, but this has given rise to two problems. First, in recent years, the banks have increased very substantially the amounts written off for their lending to Third-world countries. That has been widely welcomed, but sudden increases do have an adverse impact on the public finances. Over time, the tax cost of the 1989 increases could come to an amount going on for £1 billion.

Secondly, although the principle is clear, it is less clear how to implement it in practice. That is because the relief available depends on the extent to which the debts are estimated to be irrecoverable—and that is often far from clear-cut. This difficulty is magnified when the debts in question are those of sovereign nations rather than of individuals or firms.

This is an extremely unsatisfactory position for the banks, for the Inland Revenue, and for the taxpayer. I have therefore decided to resolve it and to remove the uncertainties in the present law. Banks will continue to be able to offset their losses on sovereign loans fully against tax, but under a clearer mechanism than previously, which will be broadly based on the Bank of England's present guidelines. There will be a limit on future increases in the cost of this tax relief between years.

For the 12 months starting today, banks' tax relief on such provisions will be limited to the same high proportion of debts as this mechanism indicates for 1989. Thereafter, the ceiling will be increased in steps of 5 per cent. a year, so that the banks will, in time, get all the tax relief to which they are entitled. If the banks sell their debt to a third party and crystallise their losses, their tax relief on them will be similarly phased, but where the debt is sold back to the foreign state, to reduce its debt once and for all, tax relief on that loss will be available in full and immediately. This measure will produce a yield of around £200 million in 1991–92, compared with what might have been expected if I had taken no action.

TAXES ON SPENDING

I turn now to taxes on spending. Given the need to keep a tight fiscal position, I have decided that the excise duties, taken as a whole, must rise broadly in line with inflation. Within that overall constraint, however, I have some modest adjustments to make.

First, for vehicle excise duty, I propose a number of changes to remove anomalies in the taxation of different types of lorries. These changes will also dramatically reduce the present vast number of different VED rates. Last year's Budget removed 80 different VED rates, and I propose to eliminate a further 188 today. This will greatly simplify the system.

Vehicle excise duty on cars—the tax disc—will be unchanged once again this year at £100. Nor will there be any change in VED for public or private sector buses, coaches, taxis and many lorries.

I will recoup the cost of this by increasing petrol and DERV duties by rather more than strict revalorisation would justify. These will rise by 10 per cent. This will add 9p to a gallon of DERV and almost 11 p to a gallon of leaded petrol. For unleaded petrol, the cash increase will be smaller, at around 9p per gallon. This will widen the tax differential even further in favour of unleaded petrol. This will now amount to almost 16p a gallon. The market share


of unleaded petrol has increased fivefold, to 30 per cent. since the changes in the last Budget. I hope and expect to see it increase even further.

For alcohol, with one exception, I propose to raise the duties in line with inflation. This will put 7p on a bottle of table wine, but only 2p on a pint of beer. Spirits, however, have enjoyed a duty standstill since 1985. I propose therefore an increase of 10 per cent., which will increase the price of a bottle of spirits by 54p.

Cigarettes also were not increased last year. This year I propose a 10 per cent. increase in duty, which will put 10p on a packet of 20 cigarettes. The duty on cigars will rise similarly, and will add 5p to the cost of a packet of five small cigars. But I do not this year propose any increase in duty on pipe tobacco. This at least will be one measure which should command the total support of the right hon. Gentleman the Leader of the Opposition.

Mr. Neil Kinnock: But not of my wife.

Mr. Major: In that case, I shall make my apologies to Mrs. Kinnock separately.

FOOTBALL

I now turn to football. The tragedies at Bradford and Hillsborough football grounds shocked us all. The report by Lord Justice Taylor made recommendations to improve comfort and safety in our football league grounds over the next 10 years.

Implementing the programme of work envisaged in the Taylor report will place a significant burden on football clubs, which many of them will find extremely hard to bear. For many are in a weak financial position, and only a handful are profitable. I recognise this problem, but I believe there is an acceptable way to overcome it. The first priority is to ensure that vital improvements in safety and comfort can be made, and the second is to avert what would otherwise be the closure of many of our grounds. If we help football now, I am confident that football will itself contribute to the improvements in facilities that are necessary.

Let me say first that much of the expenditure required to meet the Taylor recommendations is eligible for capital allowances or for full offset against tax. I know that there has been some confusion about this, and I have asked the Inland Revenue to provide urgent guidance to clarify the tax position.

However, tax allowances cannot help where there is no profit to set costs against. This is the case with many clubs. I have therefore reviewed the rate of pool betting duty—the tax which is paid by the pools companies on the stakes they receive. This currently stands at 42·5 per cent. I propose to reduce it to 40 per cent., on the clear understanding that the full amount saved is passed by the pools promoters to the Football Trust, and is used by it to improve the safety and comfort of fans at English and Scottish football league grounds.

I am confident that such an arrangement can be negotiated with the pools promoters and the football authorities. Provided that we do so, the duty will be reduced, in the first instance for five years. At the end of that period we shall review the position again. [HON. MEMBERS: "You will not."] At the end of that period, I will review the position again.

This reduction will yield around £100 million for football over five years. This is in addition to the £75

million that the Football Trust has already said will be available over the next 10 years. These sums represent very large contributions towards making sure that football league clubs can implement the Taylor recommendations and bring their grounds up to the safety standards both we—and they—want to see. Millions of people watch football every year. With better and safer grounds, I hope that many more will join them.

INCOME TAX

Next, I turn to income tax, before turning to other matters. I have no change to announced to either the basic or the higher rate of tax. They will remain at 25p and 40p respectively. Notwithstanding that, I reaffirm our objective of moving towards a basic rate of 20p when it ns possible to do so.

I turn now to personal tax allowances. This year, I propose to uprate the main income tax allowances by the statutory indexation factor of 7·7 per cent., rounded up. The personal allowances will rise by £220 to £3,005. The new married couple's allowance will be set at £1,720, as will the additional personal allowance for single parents and the widow's bereavement allowance. However, the basic rate limit, the level at which higher rate liability begins, will be unchanged, at £20,700 of taxable income. This means that a married man with a £30,000 mortgage will not begin to pay higher rate tax until his income is over £30,000.

The allowances for the elderly will similarly be fully uprated in line with inflation. For those aged 65 to 74, the personal allowance goes up by £270 to £3,670 and the married couple's allowance goes up by £160 to £2,145. For those aged 75 and over, the personal allowance goes up by £280 to £3,820 and the married couple's allowance will rise to £2,185. The income limit for these allowances will also be fully indexed to £12,300.

I also propose to raise the inheritance tax threshold by £10,000 to £128,000, in line with inflation.

The capital gains tax exemption—that is, the amount of real capital gains free of tax in any one year—currently stands at £5,000. However, from April, the introduction of independent taxation means that married couples will be entitled to not one but two exempt amounts rather than having to share one between them as at present. I have therefore decided to leave the exempt amount at £5,000 per person, which effectively gives a married couple an exemption of £10,000 in total.

I also have to set the scales for the taxation of the private use of company cars. The tax treatment of this benefit remains generous, although less so than previously, as a result of the significant increases in these scales in recent Budgets. I therefore propose an increase—but a smaller one than in previous years—of 20 per cent. The yield from this will be £160 million in 1990–91. There will be no change in the fuel scales.

In the tax system there is one allowance, the tax allowance for the blind, that, although anomalous, has long been accepted as a proper recognition of the special difficulties faced by blind people. The allowance is modest, but welcome, at £540 a year. I propose to make it less modest and more welcome and to double it. From 6 April, it will stand at £1,080.

Before I leave income tax, I have a small supply side measure to announce that will help the labour market to work better. We have always made it clear that it is not for


the Government to encourage or discourage women with children to go out to work. That is rightly a decision for them to take, and one in which the Government would be wise not to interfere. However, it is undeniable that an increasing number of mothers do want to return to work, and many employers, in private industry and in public services such as health and education, are keen to encourage them to do so.

If an employer provides a nursery for his staff in order to recruit and retain skilled people, he can set the full cost against corporation tax. However, any employee who benefits and who earns more than £8,500 a year is required to pay tax on the value of the benefit in kind. Many employers have argued that this is an obstacle to the growth of nursery provision and has created recruitment difficulties for them, and many women see that as a positive disincentive to return to work. For those reasons, therefore, I have decided to exempt the value of workplace nurseries and playgroups from taxation as a benefit in kind. That will take effect from 6 April this year.

CHARITIES

I said at the beginning of this speech that this Budget would include incentives both to save and to give. I shall come to saving in a moment, but I want first to deal with giving. I have a number of proposals to help. We are by instinct a generous nation to causes that appeal to us. The tax system already offers a great deal of help to charities. It offers reliefs on their income and on their expenditure, and it provides incentives to encourage charitable giving. There is a relief for charitable covenants that has now been in operation for many years and is worth almost £200 million to charities every year. We have been considering how covenants can be made easier for charities and donors to use, and the Inland Revenue will therefore be issuing new guidance today to simplify them.

Since 1987, relief for covenants has been complemented by the payroll giving scheme, a very user-friendly way to relieve regular giving from tax. The scheme has been doing well since its launch, and I now propose to increase the annual limit from £480 to £600.

These reliefs are focused mainly on regular giving, which is of great importance to charities. However, they are ill suited to encourage the one-off gift which, for a variety of reasons, many people find more convenient. Over the years, that has been a persistent source of concern to charities. This year, I propose to go some way to meet that concern.

I propose a gift aid scheme that will, for the first time, give tax relief for large money donations. It is simply not practical to operate a relief for all small one-off gifts—and in any event, I do not wish to undermine regular giving through the payroll scheme and covenants, which are very important to some charities. Therefore, this scheme applies to larger donations.

The lower qualifying limit for gift aid will therefore be £600 per donation—the new ceiling for payroll giving. The relief will be available on one-off gifts up to an annual ceiling of £5 million per individual donor. The tax relief will be reclaimable by the charity, and payable to it at basic rate. As with covenants, the donor will get any higher rate tax relief that is due direct from the tax office.

This relief, which will apply to gifts by both individuals and companies, will come into operation from 1 October this year. I am confident that it will maintain and

strengthen the growth of charitable giving, and I very much hope that charities will promote it actively. It will, of course, be open to the whole range of charities, from social causes to those whose activities are devoted to the arts.

I have a further measure to help charities. This is a package of value added tax reliefs, giving help especially to organisations engaged in sea rescue, medical care and research. These will come into effect on 1 May and give an additional benefit of about £5 million a year to charitable work. Full details are set out in a Customs and Excise press release issued today.

SAVINGS

I now turn to the taxation of savings, where I have a number of measures to announce. As I do so, I am conscious that the majority of personal savings are the fruits of earnings that have already been taxed.

I start with saving in shares. The development of the personal equity plan, which stands to the immense credit of my right hon. Friend, the Member for Blaby (Mr. Lawson), has been an important boost for share ownership. I am pleased to report to the House that last year was a record one for PEPs, with 300,000 plans taken out, to the value of some £750 million. To build on this success, I propose to raise the overall annual limit on investment in PEPs by a quarter, from £4,800 to £6,000. Within that, the annual limit on investment in unit and investment trusts will be increased by the same percentage to £3,000.

I am also sympathetic to the problems that investment and unit trusts face in qualifying for PEP treatment. This arises from the requirement that 75 per cent. of their portfolio should be invested in ordinary United Kingdom equities. I propose therefore to relax this rule to 50 per cent. I also propose to raise the PEP limit for those trusts that do not satisfy this rule from the present £750 to £900.

Last year, my right hon. Friend put employee share ownership plans, or ESOPs as they are known, on the statute book. ESOPs are a vehicle for giving employees a direct stake in the business for which they work. They are an attractive option and deserve further encouragement. One impediment to their growth has been that the transfer of shares to the work force can mean that the company owner faces an immediate tax charge. To prevent this, I propose to introduce a rollover relief from capital gains tax for sales of shares to ESOPs. I believe that this will remove an obstacle to their development and give this form of employee share ownership the fillip that it deserves.

In a moment, I will turn to some new and significant tax changes for savers, but first, I wish to discuss a reform which was announced in the 1988 Budget and which comes into effect next month—independent taxation for women. There is too little understanding yet of what this change will mean, but it will fundamentally change the financial affairs of women.

At present, the taxation of married women's income is wholly inconsistent with their role in society. In tax law, their income is still considered to belong to their husbands. The effect of this is twofold: it denies married women any privacy or independence in tax matters, and too often it results in heavier taxation than is fair. It is time for the system to go, and go it will from April.

In future, a husband and wife will be taxed entirely separately. Every married woman will have a tax


allowance of her own to set against her income—whether this income is from earnings, pension or savings. Three and three quarter million people will gain, of whom two million have incomes of less than £5,000 a year. One million elderly married couples will pay less tax, and 200,000 pensioner couples will be taken out of tax altogether.

No one will be sorry to see the old system go. One of its worst features was its treatment of the savings of married women. Whether they had other income or not, the interest on their savings was added to their husband's income and taxed at his rate. This was a clear penalty on thrift. From April, all that will end. This may well be the area where the reform has its greatest effect and will be most welcomed.

However, independent taxation has thrown into sharp relief another aspect of the tax system that affects all savers, and which no longer deserves to survive.

Some women will see the benefit of independent taxation automatically, if they have their money invested in national savings, or other accounts which pay interest gross of tax, but many women with only small savings prefer to save with high street banks or building societies, and so, frankly, do many other small savers. For all these savers, income tax—or rather, a proxy for it, called the composite rate—is deducted before the interest ever gets to the saver, and whether or not the saver is liable to pay tax.

Composite rate tax was introduced originally in 1894, and put on the statute book in 1951. It currently stands at just under 22 per cent. It is deducted at source. It cannot be reclaimed in any circumstances. This means that basic rate taxpayers gain by about 3 per cent.—the difference between the composite rate and the basic rate of income tax, which is what they should pay. And it means that non-taxpayers are worse off by 22 per cent.

The attraction of composite rate has always been that it allows small amounts of tax to be collected with ease from very large numbers of people. It is very convenient and very cost-effective, but the fact remains that, with composite rate tax, we tax people on low incomes who should not be taxed.

It has, of course, always been possible for these people to avoid taxation entirely, by saving in accounts that pay interest gross or tax-free, or where tax can be reclaimed, but the convenience of using banks and building societies has meant that many of them have not done so.

The scale of the problem is compelling. Once independent taxation is implemented, there will be 14 million people—nearly one quarter of the population—who have savings income that does not merit taxation, but which will be taxed under present legislation. They include some 5 million married women with little or no other income of their own, 4 million pensioners, 2·5 million other adults, and 2·5 million children with small savings accounts—often funded with small gifts of money from grandparents, or savings from pocket money.

There is no way out of this problem other than to abolish composite rate tax entirely. This I propose to do with effect from 6 April 1991, the earliest practicable date. From then on, tax will fall on those who should pay it, and will not fall on those who should not pay it.

We shall discuss with the banks and building societies how to effect this enormous organisational change. I envisage a scheme of self-certification that will allow non-taxpayers to be paid their interest without deduction of tax. For other savers, tax will continue to be deducted

at source, but at basic rate. However, unlike composite rate tax, any tax deducted will be reclaimable by any non-taxpayers who, for any reason, may not have been able to self-certify for gross payment.

This change will significantly reduce the amount of tax paid by millions of married women, pensioners, children and others with small savings, and by removing the penalty of composite rate tax, it will play an important part in encouraging the savings habit. Meanwhile, the Department of National Savings also has a part to play in encouraging the savings habit. I am therefore announcing today a 1 per cent. increase in the interest rates paid on national savings investment account and income bonds, where interest is already paid gross. This too will help encourage saving, particularly by non-taxpayers.

However, as well as removing the tax impost for non-taxpayers, I wish to do more to encourage the saving habit among taxpayers—all of them.

In the 11 years that we have been in office, a series of Budgets have removed penal rates of tax, abolished the investment income surcharge and introduced important new schemes to encourage saving and investment. I intend now to build further on those measures, for everyone, and that means going beyond the incentives to saving that we have built up so far. These schemes have been immensely successful in spreading share ownership, and will continue to be so in the future, but I now want to extend savings incentives to the mass of ordinary taxpaying savers—and potential savers—who prefer to put their money in the familiar security of high street banks and building societies.

My next measure is addressed precisely to them. I propose to introduce a wholly new tax incentive which will reward saving and encourage people to build up a stock of capital. The scheme will work as follows. Every adult will be entitled to one tax-exempt special savings account, TESSA for short. All commercial banks or building societies will be able to offer such an account. The essence of the scheme is to encourage people to save regularly over a five-year period. The incentive for them to do so is that all the interest earned on their capital will be entirely free of tax, provided only that the capital itself is left undisturbed over the five-year period.

The annual limit on the amount that can be invested will be £1,800 or £150 a month. In the first year, anyone who has capital that they are willing to tie up for longer can put this money in their account from the outset, up to a limit of £3,000, but the overall limit of £9,000 for the whole plan applies nonetheless.

To cope with the circumstances of many small savers—particularly pensioners—who use the interest on their savings for their everyday expenses, it will be possible to withdraw interest as it accrues, but only up to the net-of-tax level. At the end of the five years, the depositor then gets a bonus representing the money which would otherwise have gone in tax. The depositor will get this provided none of the capital has been withdrawn before the five years is up. They can, of course, withdraw the capital at any time, but without tax relief.

This scheme is convenient, flexible and simple. It extends a form of PEP treatment to ordinary savings. It caters for those who want to save monthly, annually, or in irregular amounts. It represents a substantial incentive to save, and I am confident that it will play its part in reviving the culture of thrift. I also believe that it is both desirable and fair to reduce tax on small savings.

This new relief will be available from next January. Its cost will depend on take-up, but could be at least £200 million in the first full year, and rising thereafter.

This Budget has contained a whole range of savings incentives. It has done so because I believe it is economically right to encourage savings, and because I believe also that it is socially right—not least because of the independence and security it offers to savers as they build up capital of their own. However, there is little point in encouraging savings if we leave in the system an over-severe penalty for doing so. I turn, therefore, to the social security system and to what has become known as the capital rule.

As the House knows, people with capital over £3,000 start to have their benefits reduced, and those with more than a certain level of savings—£6,000 in the case of income support and family credit and £8,000 in the case of housing benefit and community charge benefit—become completely ineligible for all means-tested benefits, however low their incomes.

There must, of course, be some upper limits above which help is no longer given, but the present limits are widely resented as a penalty on thrift and self-provision. [Interruption.] This is particularly so in the case of elderly people with some capital but only modest incomes. They believe it is unfair that they must use the money carefully saved during their working lives while others, less provident, have immediate access to the benefit system.

I have therefore reviewed the present limits with my right hon. Friend the Secretary of State for Social Security, and we have decided that they should be raised. The limit for income support and family credit, where the stress is less great, will rise from £6,000 to £8,000, but the problem is most acute for those whose savings disqualify them from housing benefit and from community charge benefit. [Interruption.] I propose therefore, to double the capital cut-off for both these benefits, from £8,000 to £16,000—for housing benefit and for community charge. This new limit will be of particular help to couples, but it will also apply to single people and therefore extend help to some widows and widowers who would otherwise continue to be excluded.

This measure will benefit—

Mr. Donald Dewar: rose—

Mr. Major: No.

Hon. Members: Give way.

Mr. Deputy Speaker: Order. Clearly, the Chancellor is not giving way.

Mr. Dewar: rose—

Several Hon. Members: rose—

Mr. Dewar: On a point of order, Mr. Deputy Speaker. I am sorry to interrupt, but an important concession is being announced at the beginning of the introduction of the poll tax system in England and Wales. The system has been running for over a year in Scotland—

Mr. Deputy Speaker: That is clearly not a point of order for the Chair. Mr. Chancellor of the Exchequer.

Mr. Major: This measure—[HON. MEMBERS: "Answer."]—will benefit about a quarter of a million people, two thirds of them—

Mr. Dick Douglas: On a point of order, Mr. Deputy Speaker. You are in the Chair, as Chairman of Ways and Means. Important tax concessions and changes are being made. A principle of taxation in this country—

Mr. Deputy Speaker: Order. The hon. Gentleman knows that that is not a point of order for me to deal with. I am anxious to hear what the Chancellor has to say.

Mr. Major: This measure will benefit around a quarter of a million people, two thirds of them pensioners who are at present—

Mr. Brian Wilson: On a point of order, Mr. Deputy Speaker.

Mr. Deputy Speaker: I very much hope that it is. It does the House's reputation little good to have the Chancellor's speech interrupted by points of order which are not matters for the Chair.

Mr. Wilson: It is precisely in the interest of the House's reputation that I ask, on a point of order, whether the Chancellor will make clear immediately whether the concessions that he has announced will be retrospectively applied to Scotland.

Mr. Deputy Speaker: Order. That is not a matter for the Chair. Points of order must be for me and not for Ministers.

Mr. Major: This measure will benefit around a quarter of a million people, two thirds of them pensioners who are at present wholly excluded from benefit—

Mr. Jim Sillars: On a point of order, Mr. Deputy Speaker. Given that many of us, especially Opposition Members, were unable to hear what the Chancellor said because of the noise, would it be in order to get him to repeat the last two passages to see whether that tax concession will be retrospective in Scotland, which got the poll tax a year earlier?

Mr. Deputy Speaker: Order. I am not going to listen to any more bogus points of order. I hope that the hon. Gentleman shares my anxiety to hear what the Chancellor has to say.

Mr. Major: For the avoidance of doubt, Mr. Deputy Speaker, I shall repeat that this measure will benefit around a quarter of a million people, two thirds of them pensioners who are at present wholly excluded from benefit. The total cost will be £120 million a year, which will be met from the reserve and will not increase the public expenditure totals.
To avoid delay, my right hon. Friend is laying the necessary regulations today—[Interruption.]—so that the limits will be increased when benefits are uprated at the beginning of April. He will discuss the operational implications of this change with local authorities immediately.

PERORATION

This is a saver's Budget. It takes no risks with inflation. It further strengthens the public finances. It helps the less well-off. It gives women a better deal. It offers help to charities and sport, and it reduces the tax burden on growing companies—[Interruption.]

Several Hon. Members: rose—

Mr. Deputy Speaker: Order.

Mr. Major: It is the right Budget for this year, and it sets the right course for the '90s. I commend it to the House, and the country.

Several Hon. Members: On a point of order.

Mr. Deputy Speaker: Order. If hon. Members will allow me, I shall put the Question before I take points of order.

PROVISIONAL COLLECTION OF TAXES

Motion made, and Question,
That, pursuant to section 5 of the Provisional Collection of Taxes Act 1968, provisional statutory effect shall be given to the following motions:—

(a) Spirits (motion No. 2);
(b) Beer (motion No. 3);
(c) Wine and made-wine (motion No. 4);
(d) Cider (motion No. 5);
(e) Tobacco products (motion No. 6);
(f) Hydrocarbon oil (motion No. 7);
(g) Vehicles excise duty (rates) (motion No. 8);
(h) Vehicles excise duty (exemptions) (motion No. 9);
(i) Value added tax (registration) (motion No. 10).—[Mr. Major.]

put forthwith, pursuant to Standing Order No. 50 (Ways and Means Motions), and agreed to.

Mr. Deputy Speaker: I shall now call the Chancellor to move the motion entitled "Amendment of the law". It is on that motion that the Budget debate will take place today and on succeeding days. The remaining motions will not be put until the end of the Budget debate next week, and then they will he decided without debate.

Budget Resolutions and Economic Situation

AMENDMENT OF THE LAW

Motion made, and Question proposed,
That it is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance; but this Resolution does not extend to the making of any amendment with respect to value added tax so as to provide—

(a) for zero-rating or exempting any supply;
(b) for refunding any amount of tax;
(c) for varying the rate of that tax otherwise than in relation to all supplies and importations; or
(d) for relief other than relief applying to goods of whatever description or services of whatever description—[Mr. Major.]

[Relevant documents: European Community Document No. 9487/89 on the Annual Economic Report 1989–90 and the un-numbered Explanatory Memorandum submitted by Her Majesty's Treasury on 31st January 1990 on the final version of the Report as adopted by the Council.]

Mr. Harry Ewing: On a point of order. Mr. Deputy Speaker. I apologise to my hon. Friends and to the House for the delay to the proceedings, but we are constantly told by the occupants of the Chair, including yourself with respect Sir, that this is a United Kingdom Parliament. However, what should we do when, as hon. Members representing Scottish constituencies, we find ourselves in the position we have been put in today by the Chancellor—we have been betrayed by the Secretary of State and by Scottish Tory MPs—

Mr. Deputy Speaker (Mr. Harold Walker): Order. the hon. Gentleman knows that that is not a matter for the Chair; it is a matter for debate.

Mr. Malcolm Bruce: On a point of order, Mr. Deputy Speaker. Scotland is governed under the terms of the Act of Union, passed by this House of the United Kingdom Parliament. Under the terms of that Act, taxation and benefits should be applied equally. Will the Secretary of State for Scotland make a statement—

Mr. Deputy Speaker: Order. I am not responsible for interpreting the Act of Union.

Mr. Neil Kinnock: I shall begin by following two customs of the House. The first is an ancient custom which requires me to congratulate the Chancellor of the Exchequer on the way in which he delivered his Budget statement. I shall do that gladly, although I shall say at this early juncture, that—and I am sure he will share my feeling—at the earliest possible opportunity he should make it clear to my hon. Friends, and in particular my hon. Friends from Scotland, whether the change that he announced towards the end of his speech will be extended retrospectively to elderly people in Scotland with retirement incomes of more than £16,000. I am certain that he will want to give thought to that, and I hope that he will make a positive response, because it would be a terrible shame if that was to mar an otherwise excellent maiden Budget performance.
I think that everyone will have enjoyed the way in which the Chancellor said what he had to say, even if there will be disagreement over fairly extensive parts of it.
The second custom is quite recent and was established only 12 years ago by the right hon. Lady the Prime Minister, when she was Leader of the Opposition. In 1978, when the first Budget to be broadcast live on radio was debated, the right hon. Lady pointed out that she, like everyone else outside the Cabinet, had had neither sight nor sound of the Budget before the Chancellor made his speech to the House. That system has some disadvantages, but at least it means that Parliament and nation share the same sense of unspoiled expectation—that is not without its virtues in this democracy.
In the Budget statement, the Chancellor announced much that the Opposition welcome and support. Naturally we shall want to scrutinise it in detail, but there is a fair spectrum of agreement on many of the measures and changes that the Chancellor announced. For instance, we welcome the value added tax reliefs for bad debts, especially as they affect small businesses. We welcome the differential—which I believe has increased slightly—between the duty payable on leaded and unleaded petrol. The Chancellor will enjoy support in all parts of the House for that move, as he will for the increased tax allowance for blind people.
There are many other changes which I shall not deal with now, but three merit attention. The first is the Chancellor's proposal that help should be given to users of workplace nurseries. He will remember that the Opposition were extremely hostile to the imposition of what we thought of as penalties on users of workplace nurseries. We are glad that he has responded to our pleas over a number of years to reverse that change.
Secondly, I am grateful, as are my right hon. and hon. Friends, for the additional help that is to be given to the Football Trust. I am sure that, in return, the Chancellor will want to acknowledge the significant contribution that was made to the negotiations with the football authorities and the Pools Promoters Association by my right hon. Friend the Member for Birmingham, Small Heath (Mr. Howell). A development of this kind was announced during an Opposition day debate a few weeks ago, but it is good to have it solidly confirmed by the Chancellor of the Exchequer.
Thirdly, we are very glad—this is a slight repetition, but it does not suffer from being repeated—that the Chancellor has raised the limits on the savings of retired people, thus enabling them to qualify for a poll tax reduction. I hope that he will be forthcoming concerning my request that he should review the position of elderly Scottish people.
Those three changes are ones for which we have called recently. Equally, they are all changes that in recent times the Government have turned down. Who knows, despite the Prime Minister's preferences, just a tiny corner of the Government may be starting to listen. Unfortunately, however, it is just too late to save them.
Other interesting changes have been made. The Chancellor told us, not to our surprise, that interest rates will remain high for some time to come. However, he then said, interestingly, that when they are brought down they will stay down. That is a major change of policy. Throughout the last 11 years, interest rates have come down only just before a general election. Their reduction had nothing to do with the wider economic considerations.
The Chancellor has made it clear in his first Budget speech that he will re-examine several areas. Knowing him as we do, we believe the complete authenticity of his intention to re-examine credit controls, the measurement of money supply and funding policies so that they are not too rigid—perhaps another little preparation for a future election. He gave a further commitment to participate in the exchange rate mechanism of the European monetary system. He truly showed himself in all these respects to have approached them with a new broom. The problem is that that will not be terribly convincing so long as the broomstick is ridden by the Prime Minister. Consequently, I plead with the House not to devalue the Chancellor's contribution.
We understand the circumstances that produced a Budget of this kind. It is something of a bits and pieces Budget. It is something of a stop-gap Budget. It could not be otherwise, given the policies, and the policy failures, of the Government. There was not much else that the Chancellor could do. He could not announce, for instance, that interest rates would be cut, because that would send credit up and the pound down. He could not announce that interest rates would go up, because that would have plunged the economy into recession and the Tory party into oblivion. About the only thing that he could do was to maintain the position. He certainly could not cut taxes, despite the pleadings of some in the City and some in his party. That would have been evidence of complete irresponsibility and would have sent the market into a spin.
There is a real irony in that. It will be within the memory of right hon. and hon. Members in all parts of the House, and of the much wider public outside, that for years the Conservatives have preached that large income tax reductions, especially on higher incomes, were the energiser of the economy and the spur to enterprise and dynamism. However, when all the difficulties associated with a huge balance of payments deficit mean that the Government most need energy, dynamism and a spur to enterprise, they do not even think of cutting income tax because of the devastating effect that that would have on their fortunes in the markets.
How very different from the giveaway Budget of two years ago, when the current Chancellor of the Exchequer was Chief Secretary to the Treasury. I well remember that on the day after the Budget he denounced Opposition Members for their temerity in warning, as he put it,
that cutting taxes will damage the balance of payments.
He declared boldly in the same passage:
It is hardly surprising that we should have a current account deficit when growth in the United Kingdom economy is far stronger than that of most of our trading partners."—[Official Report, 16 March 1988; Vol. 129, c. 1129.]
It was during that same month that the Prime Minister described a £1 billion balance of payments deficit in one month as a "freak". That was £40 billion-worth of deficits ago.
The right hon. Gentleman told us then that it was growth that was generating the balance of payments difficulties. It made some sense. If there is high growth, it is not surprising that the country should experience some balance of payments difficulties. But what sense does it make now, when our current account deficit is at record levels and when our growth rate is the slowest among all the major industrial countries? For us to go into deficit and debt with high growth is perhaps defensible, but to go into


deficit and debt with low growth is a shambles, especially when it is the direct consequence of the policies of Her Majesty's Government.
We have not got a huge deficit just on current account. In 1989, £28 billion-worth of long-term capital came into Britain. In the same year, £57 billion-worth of long-term capital went out of Britain. That represents a long-term capital outflow of £29 billion. The deficits—which are of some significance to this economy, which must compete and make its way out of the current problems—total more than £45 billion, compared with the remainder of the world. What a mess. What a way to meet the challenges of the 1990s, as the Chancellor put it in his speech.
He could say, "It is not really my fault. I have been in the job for less than half the financial year." That is true. Midway through the financial year, the last Chancellor of the Exchequer, the right hon. Member for Blaby (Mr. Lawson), who I am glad to see is in his place, left the field. He went off at half time, having been tackled from behind by his own captain. It is a tribute to the resourcefulness of the right hon. Member for Blaby that, after he left the Government team, he still managed to get a six-figure transfer fee, even as a part-time player. Come to think of it, perhaps that is what he meant all the time when he said that he was going to achieve an economic miracle.
There is not much in the way of miracles elsewhere, unless we consider it miraculous to make £65 billion-worth of oil revenues disappear, leaving hardly any trace. That is supernatural indeed. The imposition of interest rates that are higher for longer than ever before in British history is the stuff of which legends are made.
Despite interest rates being higher for longer than ever before, demand has still increased, retail sales have still risen, indebtedness has still soared and, as the Chancellor acknowledged, prices have continued going up. The high interest rate policy that was supposed to cure inflation is now a major cause of inflation. It adds to production costs, it adds to living costs, it provokes higher wage demands and, as the Chancellor acknowledged, high interest rates make lenders more willing to lend. The Chancellor tells us that he is striving to reduce demand in order to combat inflation, yet with every mail delivery, in every newspaper and in every car showroom there are offers of interest-free finance and easy credit.
It is a paradox, and it has perplexed people. It has certainly confused the Prime Minister. On Tuesday, the Chancellor told us that he was determined to be firm in pressing down on demand and spending. On Sunday, in the Sunday Express, the Prime Minister was dismissing talk of a squeeze and rejoicing in
the amount of retail sales, the amount of spending and the amount of overseas holidays.
The Prime Minister was boasting about high consumer spending without appearing to realise that that is what is causing the Chancellor of the Exchequer to lose sleep at night. It is so bad that it even makes the deputy Prime Minister lose sleep in the day.
It also makes a lot of other people lose sleep. People running businesses, especially medium-sized and small businesses, know that high interest rates are hitting their costs, their custom and their investment plans. The high interest rate policy with the resulting mortgage rate burden devastates family budgets.
On the Friday after the mortgage rate went up to 15·4 per cent., I met a young family man in my constituency whose mortgage had gone up from £185 to £290 a month

in 18 months—and that was before the latest increase. He saw me in the street in Blackwood and said, "15·4 per cent.! I wanted to buy my house but I didn't want to buy the building society." That is the reaction of many people. They can make no connection between their desire to buy a house and the way in which the cost of trying to fulfil a natural and normal ambition, for which they are prepared to pay, is being made prohibitive by Government policies.
Millions of people are struggling with punishing mortgage bills. Such people greet the Conservative claim to be the party of the family with bitter derision. They bear the burden of huge mortgage repayments, they see what the Government have done to the pensions and housing benefits of elderly people in their families, they know that their child benefit is frozen, and now, on top of everything else comes the poll tax.
That tax is despised and detested across the country, not only because of its cost but because of its fundamental injustice. There is not a single Member on either side of the House who does not understand that, yet yesterday the Secretary of State for the Environment was saying that the principles of the tax were going to stay.
What principle is there in a tax that makes the shop assistant pay the same as the stockbroker? What principle is there in a tax that makes the nurse pay the same as the consultant? What principle demands that a single person aged between 25 and 60 on £64 a week pay the same as someone on £6,000 a week? What principle makes someone with retirement savings of £16,000 pay the same as someone with retirement assets of £16 million?
Although we are grateful for the concession that the Chancellor has made this afternoon, £16,000 in retirement savings is not exactly a prince's ransom. It is certainly not a level of savings put together after a lifetime of work that should in any way disqualify people from assistance in their retirement years. I hope that those thresholds will be further examined, because among the greatest and the most justifiable resentments that are voiced is that people think that they have been conned, betrayed and had, because thrifty people who have set money aside and have lived frugal or simply careful lives carry the same liability as people who have fared much more fortunately. I plead, as I am sure will certain Conservative Members, for a further examination of those levels.
Of course a flat rate tax that affects people regardless of their ability to pay can represent no principle that we recognise as acceptable in a democracy. However, to hear some Conservative Members, one would think that the poll tax and all that it implies was an aberration, a sudden surprise inflicted on the Tory party out of the blue by some malign act of fate. I suppose that is one way of looking at the Prime Minister. I particularly enjoyed the television performance which many of my hon. Friends will have seen by the hon. Member for Shipley (Sir M. Fox) a couple of weeks ago, when he told an interviewer on BBC television:
Had we known that the charge would be the level that it is, then I don't think the Bill would have had the same sort of passage through Parliament.
As I watched him, I wondered whether I was witnessing the first historic instance of a fox leaving a sinking ship.
The poll tax is not a Conservative aberration; it is not an accident to modern Toryism, it is the epitome of modern Toryism. Because it is a flat rate, like other Tory


charges it is regressive; it is an inflationary and centralising tax. In short, the poll tax is not the exception to Tory policy, it is the rule and now the British people know it.
Against that background, is it any wonder that the majority of British people believe that the country is heading in the wrong direction and that major changes are needed? Of course that is not strange. People know too that there are practical and progressive alternatives to what the Government are doing. We put those alternatives, the CBI and the TUC almost identically put those alternatives as did the Engineering Employers Federation.
The right hon. Member for Henley (Mr. Heseltine) put alternatives to Government policy. [HON. MEMBERS: "Where is he?"] I think that he was here earlier this afternoon. I see the hon. Member for Leominster (Mr. Temple-Morris) pointing skywards. I did not expect such an elevation to be awarded to the right hon. Member for Henley, but I understand he is in a place where I or any other right hon. or hon. Member should not be able to see him. Doubtless he is putting forward his alternatives. Equally doubtless, the Treasury is probably costing his programme at this very moment. Then they will send it to No. 10 Downing street to have the noughts added on to the end of it.
I know that the Prime Minister hates the concept of contemplating the idea of a spectrum of alternatives and agreement about alternatives, but she has to face the fact that there is a broadening consensus among the British people for those alternatives. It is a consensus that favours incentives for investment, including the greatest incentive of stability in the currency and interest rate regime.
There is a consensus that Britain should now be negotiating entry of the exchange rate mechanism of the European monetary system. There is a consensus that there has to be increased investment in education, which the Government have cut in real terms, in training, which the Government are cutting by £300 milliion, in research and development, which is still underfunded, and in the rail and road systems. All those are recognised as essentials as the completion of the single market approaches.
Of course nobody who is part of that consensus believes that such policies would be a panacea or would offer an instant cure for inflation or for the balance of payments deficit. Everyone who is part of the consensus knows that the only dependable way to reduce inflation, to combat endemic inflation and to close those payments gaps is to produce more, to produce better and to sell more competitively. They know that, if that is to happen, long-term investment must take precedence over short-term consumption and that a modern Government have responsibility for actively promoting the objective of a commitment to long-termism.
The Budget yet again completely fails to address that necessity, yet we know that it is the course that must be followed, not only because it makes such sense for our under-invested and debt-ridden economy but because commitment to the long term so obviously works in practice for competitor countries.
Even the Prime Minister stumbles into recognising that sometimes. Three weeks ago, she told the Sunday Times that her
ambition is that we catch up with France and then we catch up with Germany.

There is a fair bit of catching up to do. When the right hon. Lady came Prime Minister in 1979, our trade deficit with France was just over £900 million, but now it is over £1,300 million; with Germany, it was just over £1,500 million, but now it is nearly £10 billion. Even without oil, those countries are known to have better systems of investing in research and development, in training and in transport by road and rail than Britain.
Germany has a Conservative Government and France has a Socialist Government, but they have in common a willingness to work in partnership with industry. They do not have the prejudices of the British Government. They do not think that the dogma of withdrawal and non-intervention is practical, any more than they think that the dogma of domination and perpetual interference is desirable.
After 11 years in power, the Prime Minister says that she wants to catch up with those countries. We all want and need that, but to do so will take a partnership in work, planning and investment. That is necessary and unavoidable in a modern economy. None of it will come from this Government; certainly none of it will come from this Budget; but it will come from us, and for the sake of our country, the sooner the better.

Sir Neil Macfarlane: I shall not follow too closely the comments of the Leader of the Opposition. I want to congratulate my right hon. Friend the Chancellor most warmly not only on the quality of his presentation but on the competence that he displayed in confounding the critics who said that this would be a dull Budget. It was resourceful and it certainly carries on the work of the past decade in reforming our taxation system. Overall, I am quite certain that this is a fair Budget that is equitable for everybody, and there is something in it for growth over the next few years.
I welcome the removal of 2·5 per cent. from the pools betting duty, which I am certain will be widely supported by all hon. Members because it has concentrated the minds of many hon. Members for a considerable time. I certainly applaud my right hon. Friend's decision to revert the rate to its 1980 level of 40 per cent.
I ask my hon. Friend the Economic Secretary to the Treasury to make a note of one or two points that I shall make, because the Chancellor's speech touched on taxation in sport and how it might affect sports other than association football. The excellent Taylor report has thrown into sharp focus the problems not only of soccer but of major spectator sports facilities. Many people associated with sport would say that excessive taxation in the post-war years is a prime cause of poor facilities, poor stadiums and a poor expectation among those who attend spectator sports. There is much truth in that, and it is precisely what the governing bodies of sport have been saying for a long time.
West Germany, the United States, France, Italy and Spain have made enormous progress since the war in developing first-class facilities. Almost all, with the exception of the United States, have been helped by their Governments with capital spend, and generous tax exemptions have been offered in the United States. We, alas, have forgotten just how important for national and civic pride are modern and safe facilities for all sports.


Most stadiums have been partly modernised over the past five or 10 years, but most of our stadium stock is the better part of 70 to 75 years old.
My right hon. Friend the Chancellor and the Treasury must consider the merits of sports governing bodies and representative bodies, including the British Olympic Association and the Central Council of Physical Recreation, which are non-profit-making distributing public benefit bodies. Ministers must assist more with the growth, viewing of and participation in sport in the United Kingdom. Surely it should be a Treasury objective to consider total tax exemption of the internal profits and gains of governing bodies. Such a move would command considerable political success, as well as falling in line with most other western industrialised nations.
Sadly, in recent weeks it has become clear that a number of sports clubs will suffer an additional burden as a result of the community charge. Although several sports and recreation clubs will benefit from some reductions, alas, others will experience a considerable percentage increase, and I commend to Treasury Ministers the CCPR national survey on present and future rates. The burdens are considerable, and as a result of our policies many sports clubs will have to pay increases in excess of 30 to 40 per cent., and many may go to the wall.
My right hon. Friend the Chancellor knows only too well the problems facing sports governing bodies. He has taken a close interest in sport over the years and knows in detail how the Test and County Cricket Board, the Rugby Football Union and the Football Association operate. I know from correspondence with him when he was a Back Bencher that he takes a close interest in sport. For the first time since Rab Butler, we have a Conservative Chancellor who understands the importance of sport and its politics. I was interested when he said that there was undoubtedly a need for the Inland Revenue closely to consider how capital allowances apply to the development of new stadiums.
There have been many increases over the years, not just in value added tax and in the burdens of the community charge and the rating system. We return time and again to the problems of gains and taxation within the financial systems of non-profit-making distributing bodies. Most of those involved in the running of sport believe that the Government do not always understand the impact of taxation on sport, leisure and recreation, which is the focal point of the life of the nation.
In recent weeks, I have had one or two letters from old friends. I want to quote from them because I want to send them on to my hon. Friend the Economic Secretary. I hope that my right hon. Friend the Chancellor himself will take a personal interest in the matter because my correspondents cover a wide electoral college. Mr. Dudley Wood of the Rugby Football Union says:
we made a provision for £530,000 for Corporation Tax"—
that is, in 1988–89.
We also paid some £450,000 in VAT during the year … We take no exception to the relatively low level of the Sports Council grant since it is our aim to be self-financing but, as an amateur, non profit distributing body"—
again, we come back to that—
it is disheartening to find ourselves penalised by this heavy burden of tax. The harder we work to produce money to finance our game and our facilities, the more tax we pay. Well before Hillsborough and the Taylor Reports, we took a decision to modernise our national ground to bring it over a period of years to a capacity of 75,000, all seated in a well equipped stadium and the rebuilding of the North Stand at a

cost of £15 million is well advanced. This will be ready in time for the 1991 World Cup which will be one of the most prestigious and largest world sporting events ever held in this country … no tax relief is granted in respect of capital expenditure on ground improvements, although some allowance is made where safety factors are involved. Having said that, the present taxation arrangements are a positive disincentive to our efforts to be self-supporting
I hope that my hon. Friend the Economic Secretary will take close note of that because it echoes the generous comments that, I think, my right hon. Friend the Chancellor made earlier.
The chief executive of the Football Association writes on similar lines. He says:
Tax allowances on capital spending and in particular, on seating and on any cover or roof
are not eligible for any form of tax relief in the form of capital allowances. It is not available
unless the expenditure is on plant and machinery … or is in relation to work which is necessary under the Safety of Sports Grounds Act 1975.
That point requires close examination. The association also urges an exemption from corporation tax and suggests that we
grant the governing bodies of sport a special status similar to charitable status. This would enable sports organisations to enjoy the same benefits as arts bodies organised as charities.
That point is worth considering, but I shall not detain the House much longer on this issue.
The Test and County Cricket Board writes along similar lines. It says:
Our First-Class County Cricket Clubs and Test Match Grounds depend very much on a successful Australian Tour once every four years to keep them afloat financially during the intervening period. The salaries we are able to pay to cricketers and the money we are able to invest in youth development and the recreational game reflect that the income derived from International cricket has to be spread over a very wide base.
The writer of the letter goes on to talk about the "context of cricket finances". He says:
VAT is the area where the greatest taxation burden is borne by cricket. The VAT burden on gate receipts, sponsorship, broadcasting income and box hire involves cricket in a net cost somewhere in the region of £3m a year.
I could highlight many other points. The chairman of the TCCB echoes the problems that the RFU, the Football Association and the Lawn Tennis Association have pointed out to me before about the rebuilding of major stadiums and the incentives that are needed. The TCCB talks about unearned income, but time and again, it comes back to the element of disincentive.
I hope very much that my hon. Friend the Economic Secretary will urge those points on our right hon. Friend the Chancellor, who made a most commendable and brave speech today—his first of what I hope will be many to follow. There are many points at which we could justifiably look closely in Committee and when the Finance Bill returns to the Floor of the House in the next few months. Those are important issues. It comes down to one thing. It is a matter of national and civic pride that we should upgrade and improve our stadiums which are such a vital part of many regions of the United Kingdom.

Dr. David Owen: The Budget will, I suspect, take a few weeks to settle in before a fair judgment can be made on whether the Chancellor has grappled successfully with the deeper problems of the British economy. In many ways, it was a characteristic Budget. We all agree that the Chancellor is a likeable


Member of the House. He does not have much flamboyance, but he is a kindly person and, within the limits of his brief, he has tried to act fairly. Many people will welcome some of the details of the Budget.
First, however, I must pose the core question, which will be asked not only in this country but in many countries. For all the words and all the rhetoric, has the Chancellor grappled with the basic problem of the British economy, which is the underlying rate of inflation? There is no question but that if, when the dust has settled and the glitter subsided, the judgment is that inflation is still riding through the system and will not be curbed, there will be continued pressure on the pound sterling and continued uncertainty about the Government's resolve to raise interest rates. In all, there will be four or five months of considerable uncertainty.
The Chancellor has chosen—or, more likely, has been told by the Prime Minister—not to say what the markets wanted to hear, and what many hon. Members wanted to hear, about a firm date and intention to enter the exchange rate mechanism of the European monetary system. I do not believe that that automatically provides an instant cure for our inflation problem, but I believe that it sets a disciplined framework within which British economic policy must go ahead. The Chancellor has used no new words and has expressed no new sentiments about the exchange rate mechanism of the EMS. In that sense, he made a deeply disappointing speech.
The Chancellor says that the question is "when", not whether, but in view of the emphasis that he laid on inflation, many people will ponder if it is to be postponed until 1991. We know of the Prime Minister's anxiety about a run-up to the general election with the issue of the exchange rate mechanism still not resolved and of the fear that the prospect of a Labour return might give rise to speculation and that the Government might have to put up interest rates in the run-up. The suspicion must remain that the Prime Minister will insist that we do not enter the exchange rate mechanism this side of the general election.
If that suspicion becomes a fear, I worry about exchange rates in the next few weeks and months. I believe that present exchange rates will firm up slightly. Most Budgets, especially one with new ideas and with a welcome emphasis on savings, have a reasonable reaction in the exchange markets for the first couple of days. I assume that the strategy behind the Budget is to encourage more private saving and giving so as to dampen consumer spending, and I strongly support that. Our savings ratio is disgraceful and the Social Democratic party has long urged the Chancellor, and previous Chancellors, to have a savings Budget. In almost every particular, the measures that the Chancellor has introduced to encourage more saving and more giving are welcome, but—and it is a big "but"—it takes some time for such schemes to have an impact on current consumer spending.
I can only believe that the Chancellor's advisers think that there is already sufficient dampening within the system because of existing interest rate policy. However, they have got that prediction wrong before and many of us now wanted a firmer and clearer fiscal tightening. In January, when the SDP produced its Budget proposals, we warned against overkill on a fiscal stance. We thought that it was possible to have a neutral Budget, but as the

statistics began to show increased consumer demand over and above expectations and as the date of a throttling back of the economy seemed to be consistently postponed, we grew more anxious. Added to that was the anxiety about the retail price index.
In the absence of a firm and clear statement on the exchange rate mechanism of the European monetary system, and with no obvious wish on the Government's part to increase interest rates—and understandably so—much of the world's attention will focus on Britain's underlying inflation rate and in particular on the retail price index. That will also be the case on the purely technical ground that, although the Chancellor was rightly sceptical about monetary aggregates, he announced a somewhat looser monetary target of 1 per cent. to 5 per cent. instead of the 0 per cent. to 4 per cent. in the previous Budget. He also implied that he thought that, for most of the period, the figure was likely to be in the higher ranges. The Chancellor also indicated a public sector debt repayment level half the size of that projected in the pevious Budget. That means that in the short term certain questions arise.
The House would do well to ponder the statement on page 44 of the Red Book that the RPI
is due to rise quite sharply in the next few months.
It is noteworthy that the Chancellor gave a figure of more than 7 per cent. only for the last quarter of 1990. It is incumbent on the Government to come forward immediately with their estimate of the peak that the RPI is likely to reach in the next few months because that will be one of the key factors in wage bargaining. We are already witnessing underlying pressure for wage settlements higher than can possibly be justified in present circumstances.
In addition, by placing so much stress on excise duties, the Chancellor has added a full 0·53 per cent. to the RPI. Moreover, he has readily acknowledged that the poll tax will add a further I per cent. to the RPI. That means that, on present levels, there will be a considerable surge in the RPI.

The Economic Secretary to the Treasury (Mr. Richard Ryder): Will the right hon. Gentleman give way?

Dr. Owen: I shall happily give way if the Minister wishes to give us the RPI figures for the second and third quarters, as that would help us in our discussion.

Mr. Ryder: The right hon. Gentleman asserted that the target M0 figures for next year were different from those that we have followed in the past 12 months. He quoted from the Red Book, but paragraph 2.34 on page 15 of the Red Book states:
The Government will continue to set a target for M0 as a yard stick for its monetary policy. A target range of 1–5 per cent. is being set for MO in 1990–91, the same as in 1989–90.

Dr. Owen: I accept the correction. I may have been wrongly advised on that. In that case we shall not have a looser target, although we must still remember the warning that the figures will be bumping up off the upper limit.
I know that the former Chancellor did not use excise duties to their full extent last year but left them largely as they were. My own judgment this year, given my anxiety about the retail price index, would have been to favour the adoption of a tighter fiscal stance—by adding 1 p to the standard rate of income tax or by increasing the national insurance contribution—rather than placing the full


weight on excise duties. By doing that, the Chancellor has taken a considerable risk with the major statistic and a statistic which causes the greatest concern at present. It is on that principle that I fear that his whole Budget strategy is likely to come unstuck.
The Treasury forecasts admit a margin of error of 1·25per cent. If, in the last quarter of this year, we found the RPI approaching 9 per cent. or more than 8 per cent., there would be considerable cause for anxiety about the exchange rate. I keep coming back to that question. The Chancellor has let the exchange rate slide in the past few months—an open invitation to manufacturers to pass on high wage demands. One of our anxieties must be that, if we have a weak exchange rate at a time of high interest rates, we may undermine the capacity of the British economy and, in particular, our anti-inflationary stance.
In view of the economic figures of the past couple of months and also because of world instability—the rise in the deutschmark following the East German elections and the fragility of the Japanese stock market—the Chancellor should have gone for a tighter fiscal stance or, failing that, he should have shown a greater readiness to enter the exchange rate mechanism earlier and accept the discipline of a firm exchange rate. Time will tell what the result will be, but the only justification for the present strategy would be a readiness on the Chancellor's part, given pressure in the next couple of months, to increase interest rates again. Regrettable though that would be, it would be far better to do that than to allow a further slow erosion of the exchange rate.
The Prime Minister's reluctance to enter the exchange rate mechanism of the European monetary system is no longer even a joke or a subject for badinage between the political parties. If there were a free vote at the end of the Budget debate, there is no question but that the overwhelming majority of hon. Members would vote in favour of a clear decision to enter no later than the autumn. Indeed, there would probably be a majority in favour of going in immediately.
People have grown increasingly anxious about the Prime Minister's so-called Madrid conditions. After all, only a few weeks ago we were being told that the reason why we could not enter the exchange rate mechanism was that the Federal Republic of Germany had a low inflation rate. Yet in the background briefing over the past few days we have heard that one of the reasons for not entering is the danger of a high inflation rate in the Federal Republic arising from its commitments in relation to unification. The ground rules are constantly being changed.
There is also a personal reason why the Chancellor should make a clearer statement. A former Chancellor has resigned on this very issue and it is essential that we should have the feeling that the present Chancellor is master at No. 11 rather than his mistress at No. 10—figuratively speaking, of course. When he winds up the Budget debate, the Chancellor would be wise to find a form of words that is far more generous in recognising the virtues of the exchange rate mechanism of the European monetary system, far clearer about his intentions concerning the exchange rate mechanism of the European monetary system and far more revealing of his personal wishes concerning the exchange rate mechanism of the European monetary system. Without such a commitment, all the fine provisions in the Budget will be seen to be no more than

useful fine tuning. We readily acknowledge that they will be useful; many of them have been advocated by the SDP for many years.
I do not wish to delay the proceedings, but I shall leave this Budget debate with a gnawing sense of anxiety. We have listened to the speech of a bank manager—that is not a term of abuse, as there are many enlightened and capable bank managers—who has recognised the specific problems and produced a large number of useful and sensible measures but who has brought to the question no overall vision and no firmness of purpose.
I am left without the feeling that the Chancellor's hand is on the tiller of the economy and with the nagging fear that the Prime Minister's hand is still on the tiller—and that it is the Prime Minister rather than the Chancellor who is the dominant member of the Government in matters of economic strategy. If that is the true interpretation, the chances of achieving by 1992 the recovery on which the Government's political fortunes rest will not have been increased by the Budget.

Mr. John Lee: I am grateful for this opportunity to congratulate my right hon. Friend the Chancellor of the Exchequer on his maiden Budget, and, I should like to thank the leader of the Social Democratic party, the right hon. Member for Plymouth, Devonport (Dr. Owen) for his generous and kind tributes to my right hon. Friend.
My right hon. Friend the Chancellor has maintained the family tradition of successfully performing on the high wire. This was a cautious Budget but, as we all appreciate, this is only the first act; act 2 comes this time next year. He rightly concentrated on controlling inflation and on savings.
I was interested that my right hon. Friend acknowledged that he had given considerable thought to and had had a hard look at the possibility of controlling credit and consumer borrowing other than through high interest rates. I am not wholly convinced that there is no alternative to high interest rates. They are a blunt weapon that hurts borrowers and businesses, especially small businesses.
Although I freely acknowledge that the financial community these days is much more international and, unquestionably, some would get round any imposed new credit controls, I cannot believe that the clearing banks, the major lenders and the credit card companies would riot respond to requests from the Bank of England or to Government directives, with consequent reductions in credit. Interest rates are now at painful levels, and I sincerely hope that they will not rise any further. They are already causing real hardship to mortgage payers and to businesses.
I welcome a number of the specific measures on savings. The abolition of stamp duty on share transactions is welcome, as is the abolition of the composite tax rate in 1991. The new tax-exempt special savings accounts—or TESSAs—for personal savings are an interesting concept that I am sure will be built on.
The doubling of the capital limits from £8.000 to £16,000 for benefit eligibility will considerably help those who face substantial community charge payments, especially in areas that traditionally have been low-rated, such as in my own area of Pendle and north-east


Lancashire, and beyond. I hope that my hon. Friend the Member for Mid-Norfolk (Mr. Ryder) is listening. He may well have to deal with that specific problem shortly, but we shall have to see what happens with future ministerial changes.
I very much welcome the Chancellor's determination to allow a £5,000 limit on capital gains tax to both husband and wife, with separate assessments coming through. However, the 40 per cent. top rate of capital gains tax, which still applies, is unacceptably high. I believe that I am right in saying that that is the one tax on savings that our Government have increased. I believe that it causes inactivity in portfolios and often subordinates investment decisions to tax considerations. I hope that that 40 per cent. rate will be reconsidered in our Budget next year.
In conclusion, I should like to welcome a few individual measures. The abolition of the benefits-in-kind taxation on nurseries will be appreciated. Charity giving should be given a substantial boost by the help announced by my right hon. Friend. Tax relief on donations to local enterprise agencies is welcome. Such agencies do excellent work. I have seen that locally in the work of the Pendle Enterprise Trust. My right hon. Friend's anouncement can only give their work a boost. The VAT reliefs and the lowering of the ceiling for corporation tax will substantially help the liquidity of many of our small firms, which, as I said earlier, are suffering because of high interest rates.
Overall, I commend my right hon. Friend's Budget to the House and wish him well.

Mr. Stuart Bell: I am grateful for this early opportunity to speak in the debate and to make some brief comments on the Budget. Like my right hon. Friend the Leader of the Opposition and like the right hon. Member for Plymouth, Devonport (Dr. Owen), I add my congratulations to the Chancellor of the Exchequer on the manner in which he made his speech. It was a friendly speech, well put across, and it gained the sympathy and commended the general support of the House.
If we look at the wider issues of the Budget and its context, however, we see that this is not and could not be a consensus Budget. As has been said, the Budget had a 1950s edge. We can agree to a lot of it, but it does not go far enough. The Chancellor did not go far enough in reversing some of the giveaways introduced by his predecessor, the right hon. Member for Blaby (Mr. Lawson) two years ago.
The Chancellor has taken £0·5 billion out of the system—not enough in the context of the Budget—and there is to be a further £1 billion next year, but that will not necessarily be satisfactory to the markets. Since the resignation of the former Chancellor, the markets have been testing the Government and the Chancellor and pushing the exchange rate down. The exchange rate has fallen gradually. Although it has risen from time to time, it is still falling, but we have not seen the application of a further rise in interest rates. One can well understand that, and I am not suggesting that increasing interest rates would be a positive policy.
Clearly, the Government's policy of using interest rates as the only mechanism to determine the exchange rate and

to combat inflation leaves a great deal to be desired. It has left the Chancellor unable to raise too much money for fear of reversing the policies of his predecessor, while not satisfying the markets either. My great dread and worry about this Budget is that a further rise in interest rates may be inevitable in the coming months. The Government may even have reconciled themselves to that fate. The business men of Cleveland and my constituents in Middlesbrough would be horrified if that were the ultimate consequence of the Budget, however well it may be disguised today.
The Chancellor declined to use the words "consumer credit". He went to great lengths to talk about the banks sending out unsolicited loan offers and documents to various people. He referred to a warning given to the banks and to a code of conduct both for banks and for building societies, warning them that they should not continue their unsolicited offers of credit. I hope that the banks will take that salutary warning. Perhaps it is the Government's way of introducing credit control in another form.
The great trouble with our economy is burgeoning credit. We give twice as much credit as the French and Germans. As a nation, we are living far beyond our means. It is for the Government to bring that under control, to bring the economy back into kilter and to reverse the trends of the past 10 years.
The Economic Secretary to the Treasury intervened to correct the right hon. Member for Plymouth, Devonport on the target range of M0 in the last Red Book, which was from 0 to 5 per cent., but he did not say whether that target had been met. My assumption and understanding is that it has not been met and that the Government have not controlled our country's money supply.
The Chancellor said that there was no lodestar of monetarism. After 10 years, we have seen the consequences of the medium-term financial strategy. One of the interesting aspects of the Chancellor's speech was that he mentioned the medium-term financial strategy only once, when referring to his predecessor. I have a feeling that, as we turn the corner into the 1990s, we shall hear less and less about the medium-term financial strategy.
Small business men in Cleveland and particularly in my constituency of Middlesbrough will welcome the changes in value added tax write-offs on bad debts and the bringing of what the Chancellor describes as certainty and simplicity to the VAT rules.
I welcome also the Chancellor's statement about the Football Trust and the fact that there will be an extra £100 million for the improvement of football grounds. My football club—Middlesborough, which on Sunday will be playing at Wembley for the first time in 114 years—has worked well with the Football Trust over the past few years and we look forward to working with it in relation to ground improvements.
It was rather churlish of the Chancellor—again, no doubt, in deference to the Prime Minister—actually to fine the major banks some £200 million for writing off their sovereign debt. When the write-off took place, we heard that the Prime Minister was incandescent with fury. Making the banks pay £200 million is perhaps some kind of revenge.
I end by repeating that I enjoyed the Chancellor's speech very much. However, I fear that this Budget will not advance our economy in any way. There may be many penalties yet to pay for his being a little on the modest side for the age in which we live.

Mr. David Knox: It is always a pleasure to follow the hon. Member for Middlesborough (Mr. Bell). I think that in last year's Budget debate he followed me, so perhaps it is right that we should be speaking in reverse order today.
I join all hon. Members who have congratulated my right hon. Friend the Chancellor of the Exchequer on the delivery of his first Budget speech. His predecessor set very high standards with his Budget speeches over the years. They were always well constructed, to the point, and commendably brief. My right hon. Friend has maintained those very high standards. He has produced a very skilful Budget in what I consider to be extraordinarily difficult and tight circumstances. Although I may have one or two critical remarks to make, I think that overall it is a balanced, cautious Budget and a great credit to my right hon. Friend.
There are four items that I welcome especially. The first is the change in the capital rules affecting income support and family credit, and particularly housing benefit and community charge benefit. The £16,000 upper limit in the case of the latter is obviously more sensible. In the past few weeks especially, all Members of Parliament—apart from those who represent constituencies north of the border—have come across pathetic stories of people, not terribly wealthy but whose savings exceed £8,000, who have not been able to obtain community charge benefit. It is to be hoped that the arrangements announced today will provide some relief for those people as they face what in many cases is a very substantial increase in the amount that they have to contribute to local authority revenue. I welcome the change very much indeed.
I welcome also the tax relief for people using workplace nurseries. This will be increasingly important in the years ahead, with the decline in the birth rate, fewer young people coming on to the labour market and therefore more women having to return to work. I hope that this measure will encourage women with families to return to work. It is to be welcomed very warmly.
As a football fan, I also strongly welcome the reduction in the pool betting duty. It is something for which those of us connected with the all-party football committee have been pressing the Government for some years. It would be churlish not to welcome the proposal. The money thus made available will help the football clubs to implement the recommendations of the Taylor report by improving their grounds. I was very pleased that my right hon. Friend's conceded that most football clubs are losing money and that very few are making large profits.

Mr. Geoffrey Lofthouse: I agree with the hon. Gentleman's point about football clubs. Does he agree that, in the context of the Taylor report, bodies such as Rugby League clubs are being given no consideration at all, and that they really ought to be considered?

Mr. Knox: Obviously, I do not know as much about Rugby League clubs as the hon. Gentleman knows. As I have explained, I am an association football fan. However, if what he has said is correct, there is obviously a case for having something done about Rugby League clubs also.
The fourth aspect of my right hon. Friend's Budget that I commend is the incentives to savings. That is very important indeed. One of the very worrying features of

developments in the British economy in the past few years has been the fall in personal savings. It is true that in the last 12 months there has been a slight rise, but overall the level of personal savings is still much too low. I hope that the measures that my right hon. Friend announced today will encourage the rise that has started to take place and that we can look forward to a much higher proportion of the gross domestic product being devoted to personal savings in the years ahead. My right hon. Friend said that his purpose was to encourage the culture of thrift—I particularly liked that phrase—and no doubt Members in all parts of the House would wish to encourage thrift.
This Budget will be judged not on its detailed proposals but on its effect on the British economy over the next 18 months. At present, this country faces two very serious economic problems—a massive balance of payments deficit and over-high inflation. Those two problems, like all economic problems, are related. I have no doubt that the balance of payments deficit is the more serious of he two, and that failure to correct it soon will do irreparable long-term damage, as it will transform us from being a creditor country into a debtor country. The fundamental cause of our balance of payments problem and of our inflation problem is excessive demand in the British domestic economy. The high level of home demand has resulted in increased imports and reduced exports. It has resulted in too much money chasing too few goods and, as a consequence, an unacceptably high rate of inflation.
Clearly, the level of domestic demand must be reduced if those two problems are to be overcome. This can be done in three ways—by increasing taxes, by increasing savings, and by high interest rates. All those measures reduce consumption, although probably the most sensible course is to have a combination of all three. So far, Government policy has tended to concentrate on high interest rates. Unfortunately this has not been terribly successful and it has had serious adverse side effects. High interest rates attract money into London and force sterling up to an artificially high level. As a consequence, British exports are dearer than they should be and therefore more difficult to sell in world markets, while imports are cheaper than they should be and therefore easier to sell. In such circumstances it is extremely difficult to reduce, let alone eliminate, the balance of payments deficit.
For those reasons, I am sorry that my right hon. Friend the Chancellor did not indicate that he intended to place less emphasis on interest rates as a means of resolving our economic problems, which suggests that interest rates are likely to remain at too high a level for too long. That is regrettable not only because of the effect on the balance of payments but also because of the effect on house purchasers, who are being hit particularly hard by the present level of mortgage interest rates. There should be less emphasis on interest rates and much more emphasis on taxation and saving if we are to achieve a balanced approach to the solution of our economic problems.
I welcome my right hon. Friend's recognition of the fact that higher taxation and higher saving have a part to play in dealing with our current problems. At least he is moving in the right direction, although I wish that he had gone much further in both respects. No one likes higher taxes—I am no exception, and I wish that they were not necessary but in my view they are necessary at present as a contribution to the reduction of demand, and I am pleased that my right hon. Friend has moved at least a little in that direction in the Budget. I wonder, however,


whether he was right to concentrate the increases on excise duties, which in effect are a form of indirect taxation. The disadvantage of increasing indirect taxes is the effect on inflation. There is an advantage in increasing direct taxes because there is no inflationary effect. Given our present inflationary problem, it would have been much better to leave indirect taxes alone and to increase direct taxes only.
I wonder also whether my right hon. Friend has gone far enough with tax increases. As they are, in effect, a substitute for high interest rates, it seems that a bigger rise in taxes would permit an earlier fall in interest rates. After all, direct and indirect taxes are a fairer means of reducing demand than interest rates, the impact of which tends to be felt disproportionately by those who are purchasing their houses by means of a mortgage. Nor do direct or indirect taxes have as great an adverse effect on investment as interest rates, and investment is, of course, in the medium and long-term interests of the country.
In current conditions, an increase in savings can have only beneficial economic results. There are no adverse side effects. The decline in savings in recent years, to which I have referred already, has been a worrying feature of our economic performance. It has aggravated both the balance of payments deficit and inflation. This afternoon, my right hon. Friend the Chancellor has introduced several measures to encourage higher savings, and we must all hope that they will have the desired effect. I only wish that he had gone a little further. Saving is the least painful way of righting the balance of payments and fighting inflation. A dramatic rise in saving—involving, as it would, lower consumption—would lessen the necessity for high interest rates and high taxes.
A persistent and alarming feature of the British economy is the rise in earnings above the increase in output, with its consequent inflationary effect. Despite the comparatively high level of unemployment and the freeing of the labour market which has resulted from the Government's trade union legislation, we have an overheated labour market. As unemployment has fallen—it has fallen sharply over the past three years—the overheating has intensified. It is alarming that this has happened with more than 1·5 million people out of work.
Obviously, we need better training and more measures to improve the mobility of labour. Irrespective of what action is taken, it seems inevitable that the labour market will continue to suffer from overheating even in times of high unemployment. I am afraid that we are no nearer solving the great unsolved economic problem of the past 45 years, which is how to control wage and salary cost inflation.
I know that incomes policies have their weaknesses and deficiencies, but we seem not to get on very well without such policies. Is it not time that the Government took a less doctrinaire view of incomes policies? Might not an incomes policy make at least some contribution to reducing wage and salary cost inflation?

Mr. Roy Hughes: It is always a pleasure to be able to take up the remarks of the hon. Member for Staffordshire, Moorlands (Mr. Knox).
One of the claims to fame of the Chancellor of the Exchequer is his family's connection with the circus. I am

reminded of the words of the late President Harry Truman, who said, "If you can't ride two horses at the same time, you shouldn't be in the b—circus." By common consent, the Chancellor of the Exchequer has had a difficult ride today, and in preparing his Budget after being handed the poisoned chalice by the right hon. Member for Blaby (Mr. Lawson). The City does not appear to be happy. Its attitude was summed up on the front page of The Daily Telegraph on Saturday. It appears that Mr. Peter Warburton of Robert Fleming and Co. Ltd. said that we have a grim picture of stagnant output, rising labour costs, destocking and falling profits. It is in that context that we can consider the proposals of the Chancellor of the Exchequer.
Most significant, perhaps, was the concession for the poll tax. As my right hon. Friend the Leader of the Opposition said, £16,000 in savings is not exactly a king's ransom. I feel certain that the tax will need to be greatly refined before it becomes acceptable to the British people. I welcome the concession on lead-free petrol, for environmental reasons alone. The continued differential is imperative. Likewise, I welcome the tax concessions for workplace nurseries. Married women who go out to work are now an established part of our system, and the trend is likely to continue in the years ahead.
Financial assistance is to be given to the Football Trust. Such action was vital after the Hillsborough tragedy. The additional revenue of £100 million will be most welcome. It will encourage provision to be made for more comfortable sports grounds.
The Chancellor of the Exchequer was restrained this afternoon. To return to my circus reference, he was restrained because he has three, not two, difficult horses to ride. First, there are the trade figures; secondly, there is inflation; thirdly, there are exceptionally high interest rates. In 1989, Britain had its largest ever balance of payments deficit, of over £20·4 billion. Compare that with the £50 billion surplus of West Germany.
As my right hon. Friend the Leader of the Opposition reminded the Prime Minister, there is a great deal of catching up to be done. There seems to be little improvement in 1990. The January figures show that imports were flooding in. We had the highest ever level—£10,569 million—in one month alone. Concern has been caused, too, by invisible trade, which for the last quarter of 1989 showed a deficit.
There are the joys also of Common Market membership. In 1989, we had a trade deficit with the EEC of £14·4 billion. This year, we shall contribute £4·6 billion to that organisation. That is 15 per cent. of its total revenue. There must be a moral there somewhere.
To tackle the terrible dilemma that the Chancellor of the Exchequer faces, he, like his predecessor, has relied exclusively on interest rates. That is what the right hon. Member for Old Bexley and Sidcup (Mr. Heath) has described as the one-club approach. By contrast, the shadow Chancellor, my right hon. and learned Friend the Member for Monklands, East (Mr. Smith), has consistently urged temporary credit controls and a limit on bank lending. That would be a means of curbing excess domestic demand.
The solution, nevertheless, to the trade deficit is essentially a long-term one. Investment in manufacturing industry is vital if Britain is to prosper in the decade ahead. Even the right hon. and learned Member for Surrey, East (Sir G. Howe) now recognises this fact. It is a pity that he


did not realise the error of his ways way back in 1981, when he was Chancellor and so much of British industry was razed to the ground. This Government, like no Government before them, have enjoyed the untold bounty of North sea oil revenues, but the opportunity for investment has been wasted. In fact, manufacturing investment has only just returned to the level achieved by the last Labour Government.
We have had a tight Budget today, but of course it remains the Chancellor's ambition to create an economic upsurge next year to try to save the Conservative party from defeat at the polls. His announcement today certainly points in that direction. It is not difficult to realise, though, that such a short-term strategy is not in the long-term interests of this country. What the Chancellor has tried to do today is simply paper over the cracks. I repeat that the Government, and the Chancellor in particular, should directly encourage investment in manufacturing industry, new technology and the undoubted skills of our people.
Then there is inflation, which the Chancellor's predecessor called the judge and jury. It now stands at 7·7 per cent.—higher than that of any of our major competitors. For example, in Germany it is 3 per cent. and in France 3·6 per cent., while the EEC average is 5·4 per cent. This is not a happy picture, but the Government are not helping. I will give some examples.
Prescription charges have gone up again. Do hon. Members remember that, in 1979, they were 20p? On 1 April this year they will be £3·05. What a contrast that is. Then there are domestic water supplies. In 1990–91, there will be a 16 per cent. increase on the previous year's figure. Bus, tube and rail fares have all been raised above the inflation rate. Rents will rise substantially in the next months. Many Conservative-controlled authorities are imposing increases above the Government's maximum guideline of £4·50 a week. Electricity charges, on average, are up by 7·7 per cent. but in South Wales, an economically weak region, the charges are up by no less than 12·9 per cent. The poll tax is expected to raise the retail price index by 1 per cent.
I notice, too, that wages are up 9·25 per cent. for the fourth consecutive month. Last Friday, the Secretary of State for Employment was warning that big pay rises could cost jobs. Even the Prime Minister is now urging wage restraint. Yet what do we find? The bosses—by that, I mean top chairmen and chief executives—have awarded themselves salary increases of nearly 28 per cent. in the past year. That is nearly four times the rate of inflation. Some would consider that leadership is best shown by example, but here again it would appear that there is one law for the rich and another for the rest of us.
After his appointment less than five months ago, speaking of his economic medicine, the Chancellor said: "If it isn't hurting, it isn't working." There is now a more up-to-date version of those words it is hurting but it is not working. For industry, a 15 per cent. interest rate is simply calamitous, as the Confederation of British Industry readily admits. Mortgagors are facing a terrible dilemma. They just cannot meet the rocketing repayments demanded.
There are two major side effects of this situation. First, there is debt. A recent study by the Policy Studies Institute showed Britain to be drowning in a sea of debt. Nearly 2·5 million households had difficulty paying their bills last

year. Wales has been particularly badly hit by mortgage misery. Cardiff city council has had to set up a special advice centre to deal with the situation.
Secondly, according to Shelter, which knows about these things, homelessness has been increasing for some time, and when the poll tax is introduced in a few weeks' time, there could be an explosion. Poll tax is a story in itself. To me it was best summed up in the words of the right hon. Member for Henley (Mr. Heseltine), the Prime Minister's likely successor, who said:
I cannot remember a discussion of the option of the poll tax in which it was not rejected as expensive, ineffective and unfair.
It is for those reasons, of course, that we have had this very limited concession in the Chancellor's statement this afternoon.
But it is not only poll tax; the whole range of this Government's policies are now being rejected by the electorate. The Mid-Staffordshire by-election on Thursday will be an indication of this.
I repeat that all that the Chancellor has tried to do today is paper over the cracks, in the short-term interests of the Conservative party. The Prime Minister is now under constant threat from inside her own party. There has been no economic miracle. A £20 billion trade deficit, inflation at 7·7 per cent. and interest rates at over 15 per cent.—these figures, together with the opinion polls, spell a story of disaster for the Government. The ship is sinking fast. The faster the process is completed, the better it will be for the people of this country.

Sir Alan Glyn: This is a sensible Budget and one that has been produced against a very difficult background. Nobody knew which way the deutschmark would go and and that is one of the factors that have made it extremely difficult to prepare the Budget. Nevertheless, my right hon. Friend the Chancellor has concentrated on the important things—first, the reduction of inflation and, secondly, the building up of a strong economy in this country. To do that he needed to encourage savings, and many of the measures that he has produced will do that.
I am particularly pleased that he has raised the threshold to £16,000 for poll tax. It always seems to me to be quite incredible that we should encourage people to save and then, at the end of their lives, tell them that they cannot have any benefit because they have saved. That is a positive disincentive to saving. Savings are of the utmost importance to the country. Before the war we were always dependent on our invisibles—in other words, our investments abroad—and the same principle of savings applies today.
I am also pleased to see that my right hon. Friend has at last provided for taxing husband and wife separately and that he is encouraging the small investor and encouraging people to put more money into charities. The VAT changes will help small firms, but they will not match the increase in value that will be placed on the properties and the increase in other taxation.
My right hon. Friend the Chancellor has not been able to repay quite so much national debt as was repaid last year. People do not attach much importance to the repayment of national debt, but it saves about £150 million in interest. Reducing the debt means paying less interest, and my right hon. Friend explained how that money could


be better spent. I have always believed that restrictions on credit cards and credit generally would be helpful, but I have been told that that would make only a small difference. The loans by big banks to South American countries are of far greater importance and should be carefully considered. My right hon. Friend has paid attention to that point.
The right hon. Member for Plymouth, Devonport (Dr. Owen) mentioned the exchange rate mechanism. I do not believe that we should move from the position that we took in Madrid, which was that we should enter the mechanism only when it suited us to do so and not when it suited others. It is for us to judge the moment when we should join.
I especially welcome the increased allowance for the blind to about £1,000. We all know the difficulties that they face and the increased allowance will make a great difference to them.
I am rather divided on the question of workplace nurseries. There are two ways to view the question—first, family life, and secondly, working women. Whether we like it or not, because there is a smaller work force we must accept that there will be more women in employment, so I have no alternative but to welcome my right hon. Friend's proposal.
I say to the House, never mind the petrol, the wine or the beer: what is most important is that the Budget will lay the foundations for a nation which believes in saving, encourages people to work and at the end of their days allows them to enjoy their savings. The taxation system that we have been promised is an encouragement for the future. I am grateful to hon. Members for listening to my speech.

Mr. David Alton: I join other right hon. and hon. Members who have thanked the Chancellor for the way in which he presented his Budget, and I congratulate him on his manner in doing so.
The right hon. Member for Plymouth, Devonport (Dr. Owen) said that he regretted the fact that the Budget contained no commitment to join the exchange rate mechanism immediately. I agree that it is a matter for regret and I hope that it will be rectified before too long. Unlike the hon. Member for Windsor and Maidenhead (Sir A. Glyn), I have an enthusiasm for the ERM as I believe it to be the correct structure and discipline within which to order our economy. However, I agree with the hon. Gentleman about the necessity to encourage saving and shall focus most of my remarks on that.
It is a curate's egg of a Budget—we all welcome parts of it, but there are other parts which will not help our constituents. The House will not be surprised to learn that I am especially pleased about the decision on pool betting duties. I represent part of the city of Liverpool, where the two major pools promoters—Littlewoods and Vernons—are based, and it will be good news for them, not least because they have supported the Football Trust for many years. I am sure that they will use their good offices to ensure that much-needed improvements are undertaken to grounds—something that Liverpool, having experienced the Hillsborough disaster, will want to see carried out with great expedition.
I also welcome the proposals for charitable giving. It is the right approach to encourage personal generosity. Many people want to give more and it is right that the state should match that giving.
As I have said, the Budget is a curate's egg. It is scandalous that the Secretary of State for Scotland was not at the Dispatch Box this afternoon to explain what the poll tax exemption would mean to those who have been paying the community charge in Scotland for the past year. The exemption is also of little use to those who do not have any savings. Many of my constituents face poll tax charges of almost £500. For them, the community charge is a regressive form of taxation. Exemptions alone will not ease their minds—they want the community charge replaced by a more equitable form of taxation based on local income tax. The absence in the Chancellor's speech of anything about collecting this tax on the basis of a person's ability to pay is an unfavourable judgment on the Budget which will be made throughout the country.
I welcome what the Chancellor said about reviving the culture of thrift. That is desperately needed. The right hon. Gentleman said that this was a Budget for savers, but it must be said that many of the problems of insidious debt which he says have to be met have been created by the very people now offering solutions.
The Chancellor said that he hoped to pay off £7 billion of public debt in the next 12 months. No hon. Member would oppose meeting some of our debt payments, and it will certainly save on interest charges, but we must contrast this with the position of local authorities. Their rate support grant—and now the community charge grant—has been reduced year by year. As a result, local authorities are encumbered by massive corporate debts. In Liverpool, a 1 per cent. increase in the interest rate means a staggering £500,000 increase in corporate debt, which now stands at more than £700 million.
The Chancellor mentioned that banks had been paying off some of the debts of Third world countries unable to meet debt charges. Again, I welcome that, but the fact is that we have been drawing more from Third world countries than we have been giving them in aid as they struggle to pay off the debt charges with which they have been saddled for so many years. Small movements in interest rates cripple those countries. The one way to stabilise our interest rates is to move rapidly into the exchange rate mechanism, and the sooner the better.
Debt is insidious and destructive—in the Third world, in many of our local communities, and nowhere more so than in its effect on family life, which in many parts of the country is collapsing. One in three marriages now ends in divorce. Marriage breakdown is 600 per cent. higher than it was in 1961, with 150,000 couples divorcing each year. It is clear that many families have great difficulty making ends meet while preserving their marriages. A major contributory factor in the corrosion of family life has been the strain imposed by crippling debt. Last November, in answer to a parliamentary question that I tabled, the Chief Secretary to the Treasury confirmed that Britain's debt now stands at a staggering £378 billion. The fact is that, the poorer the person, the more debt he faces.
Last year, more than 2 million households in England, Scotland and Wales fell behind payments and found themselves in debt. Together, their arrears amounted to £2·9 billion. Our nation of savers, as the Chancellor described it, has become a nation of debtors. What has that meant for families? Last year, more than 23,000 gas


supplies and 73,000 electricity supplies were disconnected, 13,780 homes were repossessed and 70,480 households were in mortgage arrears by six months or more. A recent survey showed that debt led to emotional and physical problems, ranging from feelings of isolation to marital break-up and suicidal tendencies—according to the National Society for the Prevention of Cruelty to Children it is even one of the stress factors involved in child abuse.
The Office of Fair Trading says that 3·6 million people feel over-committed with credit, 4·5 million have had difficulty in the past five years with repayments and 8·2 million have taken on commitments that they now regret. Millions of families are living in the hope that something will turn up, pressurised as they are by loan sharks and greedy money-lenders charging usurious rates of interest. A court case under way in Birmingham involves an extortionate annual percentage rate of interest of 1,192 per cent.
What of the household names? Big high street stores offer their own credit arrangements. This month the annual percentage rates of credit at a sample of stores reveals that John Lewis is charging 23·8 per cent., Habitat 34·4 per cent., Marks and Spencer 34·5 per cent. and Next 39·9 per cent. Credit cards range from 22·4 per cent. on Lloyds Gold Card, plus a £30 annual fee, to 31·3 per cent. on the TSB Trustcard/Visa. Advertising continues to stimulate the demand for more credit which in turn will lead to even more indebtedness.
If, along with his Budget today, the Chancellor were forced to present to Parliament an impact statement, detailing how his policies would affect families and communities, he would have to address those fundamental questions. It is families and neighbourhoods who are the foundation and cornerstone of society, not the Dow Jones index or sterling's relative strength against the deutschmark. It would stop this high street daylight robbery and help to curtail spending if we set an interest rate limit on retail sales.
I am also sorry that there was no mention in the Budget speech of credit unions, which I passionately believe should be supported. They establish saving and financial disciplines, promote saving and strengthen communities.
The Government should also consider making provision in the national curriculum for money management education. The younger people are, the more likely they are to be in debt. We should also impose a levy on institutions such as banks and building societies, forcing them to contribute to the cost of setting up proper financial counselling services. Young people especially are simply not given adequate advice. They run up massive debts which, like an albatross round their necks, encumber them for years.
Perhaps politicians should also consider how much worse matters are going to be made by the imposition of the community charge and by student loans. Taken together, these also create a situation in which people simply have to borrow—always borrowing in order to fend off the worst. That in turn puts pressure on communities and families.
The Chancellor sat down at the end of his Budget oration having presented yet another Budget largely geared to the needs of money markets and financial institutions. Economics should be made to serve the people, not the other way round. Success or failure should be measured and judged in relationist terms, not merely materialistic ones. They should be judged by the impact

that policies will have on families, communities and ordinary people. By that measure, today's Budget has not addressed any of the fundamental problems in Britain today—it has merely tinkered with the numbers.

Sir Anthony Grant: The hon. Member for Liverpool, Mossley Hill (Mr. Alton) referred to the Chancellor's speech as being like the curate's egg, good in parts. I should like to apply the same description to the hon. Gentleman's speech because I agree with some of the things that he said and disagree with others. I wholly disagree with him on local income tax, which I happen to think a nonsense, but I have a lot of sympathy for what he said on the exchange rate mechanism.
Because banking and insurance were mentioned in the Budget, I should at once declare an interest in Barclays Bank and Bowring UK Ltd. I shall be making no direct references to those companies although they may well be affected by the Budget, as will many others, I have no doubt.
I should like to pick up a point raised by the hon. Member for Mossley Hill and by my hon. Friend the Member for Windsor and Maindenhead (Sir A. Glyn) on credit card indebtedness. As has been well acknowledged by the present Chancellor and his predecessor, it represents only 2 per cent. of total borrowing, the overwhelming majority of borrowing being represented by loans to businesses and loans for house purchase. It is as well to understand that and keep things in perspective.
The Budget is both responsible and sensitive. It was brilliantly and lucidly presented by my right hon. Friend the Chancellor. As a neighbour of his in Cambridgeshire, I was particularly proud of the way in which he undertook this daunting task, his first Budget, under the glare of the television lights and in extremely difficult times. He resisted the temptation to take the easy option; on the other hand, he refrained from indulging in what I call the British disease.
Our press and media and, if I may say so, our Opposition—it does not matter which party is in Opposition; we did the same when we were in Opposition—have a unique knack of denigrating and running down our country. That is immensely damaging, because it is always misunderstood overseas. The Chancellor was right to stress in his opening remarks the important factors about our economy, which is basically much stronger than some jittery folk would have one believe. He did us a great service in putting it in perspective. Nevertheless, in view of the international situation, he had to tiptoe delicately along a tightrope.
The Government have used the crude interest rate policy as their main weapon in the battle against inflation. No one in the House or outside it with any sense of responsibility would deny that our major battle is with inflation—it is a curse and a cancer, affecting everybody, from the greatest firms to the humblest citizen in the land—but when it comes to the method used to deal with it, I myself have been publicly critical of the excessive use of the interest rate policy. I dislike high interest rates, even though I recognise the necessity for them, because too great a burden is placed upon three groups of people who


have borne the brunt of the battle against inflation. In other words, the have-nots have suffered more than the haves.
Those who suffer particularly from a high interest rate policy are the small firms, which, unlike big firms, have been unable to build up large profits and which work on very tight margins; the small farmers, as I know from my experience in East Anglia, who depend very much upon credit and borrowing from banks; and the new home owners, the people who bought their houses quite recently. Those are the people who have to bear a very heavy burden. So I was glad that to some extent the Chancellor recognised, with great sensitivity and sympathy, the problems suffered by those groups.
I was pleased that the Chancellor recognised the problems because, after all, inflation is the responsibility of Government. I recall very well the economic gurus of the 1970s, always telling us that inflation was Government's responsibility, that it was Government who caused it, not ordinary individuals. That being so, it is right that Government should accept a fair share of responsibility in that respect. The Chancellor himself recognised that in what he did for small firms. I was pleased with the value added tax measures, which are particularly welcome. The other tax exemptions will give great encouragement to that immensely important sector of our economy.
My right hon. Friend the Chancellor gave encouraging news. After all, this is the first time in history that I can recall when 1,500 net new firms have been starting up each week. That is not the sign of an economy in depression and decay, but a sign of buoyancy and enthusiasm. It has happened under no previous Government. I was the first Minister responsible for small firms. We were David against Goliath; we were the Cinderellas. We had little support—none at all from the Opposition or the Confederation of British Industry. In those days, nothing approaching that number of people were starting up and successfully pursuing small businesses. The Chancellor has recognised that, and I welcome what he has done to support small firms.
I am also delighted that my right hon. Friend has abolished stamp duty on share transfers. If I have a regret, it is that he could not make a reduction in stamp duty for house purchase, as that might have given a little fillip to the housing market. Stamp duty is a ridiculous tax, and I have not the faintest idea why it was ever introduced. I know that it raises considerable revenue for my hon. Friends in the Treasury, but the sooner it finally goes the happier I shall be.
Let me touch on the macro-economic position. I accept that interest rates must stay, and I appreciate the Chancellor's point that he did not want to suddenly bring them down and then have to put them up again; that would create instability. Likewise, I hope that he has got the position right in believing that his fiscal measures are sufficient to sustain interest rate monetary policy as it is. I respect his judgment that there was no need for any stronger taxation measures than he imposed to avoid putting up interest rates in the future. I profoundly hope that that is right, but it is a tightrope along which he tiptoed with great elegance and skill, as one would expect of someone with his family background.
For two reasons, I did not agree with my hon. Friend the Member for Staffordshire, Moorlands (Mr. Knox) when he said that it would be better not to have increased indirect taxation, but that we should have increased direct taxation. First, that would have put the basis of direct and indirect taxation out of balance, which is the last thing that we want to do.
Secondly, ever since the Government came to power, our policy has been to switch from direct to indirect taxation. Direct taxation is a tax on effort, enterprise and work, whereas indirect taxation is a tax on spending. At this time it was necessary to curb spending, but not necessary to impose a burden upon work and enterprise. Therefore, I support the Chancellor's increase in excise duties—quite apart from the alleged effects on health of smoking and drinking.
The Chancellor described this as a savings Budget, and it was right and proper for him to do so. At a time such as this—when there was room for manoeuvre, and when taxation was constrained and had to be neutral—the onething that we had to do was encourage savings. He has done that splendidly, with some novel ideas. I am especially attracted by the tax-exempt special savings account, known as TESSA—I know that that will appeal to my hon. Friend the Member for Billericay (Mrs. Gorman)—which will be especially attractive to small or first-time savers. It will appeal to a wide range of people who perhaps had not thought of saving hitherto.
I was especially pleased with what the Chancellor did for unit trusts and employee share ownership, as I was a founder member of the wider share ownership movement before I entered the House. With the late Maurice Macmillan—the son of Viscount Stockton—I formed the movement, and we had a great deal of help from Lord Lever and Richard Wainwright. It was an all-party movement. We struggled desperately to get it going, as successive Governments put more burdens in the path of those who would like to invest in shares. We bumped along against a lack of Government enthusiasm, but our philosophy always remained the same: a desire to spread the wealth of the nation throughout the people.
Many Opposition Members do not understand the need to spread wealth, wanting to collect it into the hands of the state. My desire is always to distribute it, and that is why I support the privatisation programme and home ownership. I hope that that continues and has not been damaged too much by high interest rates. When people acquire savings and earners are turned into owners, they acquire a degree of independence and a stake in their country that they could never have if everything were vested in the central hands of the state. I congratulate the Chancellor on doing what he did.
One of the most creditable features of the Government is that, for the first time in living history, there are more individual shareholders than trade union members. That is a most healthy development, as it has given independence to people, enabling them to stand tall and to own a bit of our economy. That should be encouraged. I wonder whether the Chancellor had a chance to study—if not for this Budget, then perhaps for a future one—the work of the Invest in Britain Campaign. A phrase from the memorandum that it sent him said:
They sought tax relief on U.K. equity investments up to an agreed ceiling held for a minimum of 12 months and the rollover of capital gains tax liability while the funds remain in U.K. equities.


Perhaps the Chancellor did not go as far as the organisation would like, but his thinking was along those lines. I hope that that will be the theme for the future: the spread of ownership is essential if we are to remain a free society.
I agree with the hon. Member for Mossley Hill on the exchange rate mechanism. We are already in the European monetary system, I understand, but the exchange rate mechanism is the question mark. I understand that a decision was made at the Madrid summit to which the Chancellor, the Government and the Prime Minister are committed. Nevertheless, the sooner we can join the exchange rate mechanism the better it will be for Britain, for our economy and for business generally.
When I talk to business men, I find above all that they want stability of currency. As our erstwhile colleague Sir Leon Brittan—now a European Commissioner—said in a remarkable speech, it is heartbreaking for businesses to work out their activities, to produce things at the right cost, to allow for a sensible profit, to have people working on a scheme and to arrange exports, and then suddenly to find that they are blown off course by a weird movement of currency over which they have no control. As the CBI says, they would welcome an early entry into the exchange rate mechanism. They would accept that there is a discipline attached, and that it is not an easy, soft option.
When the late Lord Stockton urged entry of the Common Market, he said that it was not a warm Turkish bath, but a cold bracing shower. However, for the sake of stability, a degree of discipline is acceptable. So we should look again at the Madrid summit conditions and, if they seem excessively rigid, reconsider the situation, if that means a chance of us getting early into the exchange rate mechanism and securing stability for the future.
I believe that this will prove to be a remarkably successful Budget in difficult circumstances and that the Chancellor will prove to be one of the great Chancellors of our age.

Debate adjourned.—[Mr. Sackville.]

Debate to be resumed tomorrow.

Redbridge London Borough Council Bill

Order for Third Reading read.

7 pm

Mr. Neil Thorne: I beg to move, That the Bill be now read the Third time.
This Bill is promoted by the council of the London borough of Redbridge. It would authorise the establishment of a market on a site near Ilford town centre. Following a long local inquiry, the council in 1980 adopted a local plan for the town centre.
In accordance with the proposals in that plan, the council has revitalised Ilford town centre by the construction of a relief road diverting the A118 round the town centre, providing service roads and the pedestrianisation of part of the High road. As a consequence, a pleasant environment has been created in Ilford town centre for workers, residents and shoppers.
That has led to considerable investment in the town centre, and the Prudential Corporation and the Norwich Union Insurance Group are currently constructing a £100 million retail development, known as the Exchange at Ilford. That will provide 51,000 sq m of new shopping floor space together with a 1,200-space car park.
The plan proposed the development of a site in Ilford town centre for a substantial shopping development, to be combined with an expanded and more attractive covered retail market as a vital feature of the improved shopping centre. Since the adoption of the plan, about 250 people have shown a desire to take stall holdings in the market.
The council believes that a market established on the proposed site, which it owns, in Ilford town centre would provide an additional and attractive facility for shoppers and would complement the Exchange at Ilford development. The council has the support in that matter of the Redbridge chamber of trade and commerce, the Ilford Traders Association, the Prudential Corporation and the Norwich Union Insurance Group. Planning permission will be sought separately for the establishment of the market if the Bill is successful.
The London borough of Havering has two markets at Romford, one on a Wednesday and one on a Friday, which I believe are protected by charter or lost modern grant within a distance of six and two thirds miles and that it would be in contravention of that protection to establish the proposed market at Ilford. Havering has a third market at Romford, operated by it in exercise of its powers under part III of the Food Act 1984. The Romford markets contain about 600 pitches on each of those days.
Havering council petitioned against the Bill, and the issues between the two councils were dealt with by an Opposed Bill Committee. Evidence was brought by the two parties and the Committee decided on a compromise by which the Bill was allowed to proceed, subject to certain amendments for the benefit of Havering borough council, including a special provision for compensation.
The Bill having reached this stage, it having been properly contested in an Opposed Bill Committee, and the House having allowed the measure to proceed thus far., I hope that hon. Members will tonight grant it a Third reading so that it may proceed on its way.

Mr. Robin Squire: To hon. Members who are not acquainted with Redbridge or Havering, the events which we are now discussing will appear to contrast with the preceding debate. Indeed, some hon. Members may find it difficult to relate the importance of this measure to the international importance, as it were, of the previous matters with which we were concerned.
Hon. Members whose constituencies come within the area of the Bill accept that we are dealing with extremely important matters, as I shall show. The Bill could also have a major impact on many other constituencies not specifically mentioned in the measure. Those constituencies, by clear and obvious linkage, would be affected by similar legislation, were it to be introduced.
I begin, not for the first time, by congratulating my hon. Friend the Member for Ilford, South (Mr. Thorne) on the way in which he has conducted the proceedings on the Bill. He knows that my opposition to it in no way affects my personal friendship with him. It is simply a question of each of us seeking to do our duty, as we see it, by our constituents.
I must also mention my hon. Friend the Member for Romford (Mr. Neubert), the Parliamentary Under-Secretary of State for Defence Procurement, within whose constituency is situated Romford market, around which the resistance to the Bill coalesces. He is prevented, by his duties in government, from contributing to these proceedings, but he has been present on each occasion when we have debated the Bill.
We are at the final stage of a hard-fought battle over the measure. It may be worth at the outset detailing the main changes that have occurred compared with the version of the Bill that was originally deposited, because those changes highlight a central message that I am anxious to convey to the House. Most important among the changes has been the removal of the possibility, originally set out in the Bill as deposited, of having two markets unlimited as to size and certainly not tightly drawn as to location.
Havering welcomes the fact that the compensation provisions have been substantially rewritten, to the benefit of the existing Romford market. The transfer or disposal of market rights created by the Bill can now take place only with the consent in writing of Redbridge council.
I could detail other changes, but in fairness to the House and the wish that hon. Members must have to proceed, I shall limit myself to those three main ones, which are all significant and which set out clearly the fact that the opposition of Havering council has secured a transformation in the original Bill.

Mr. William O'Brien: I understand that compensation is a matter for negotiation between the two boroughs. Is there any information about the way in which compensation money may be spent by Havering borough council? Will that money be regarded as revenue or capital, and could it be used, for example, to offset poll tax charges?

Mr. Squire: I had hoped that the hon. Gentleman would ask me a question that I could answer. I cannot answer, because, while I understand that the money would go to the London borough of Havering and could be spent as a revenue item, I cannot be sure of that and would not wish to mislead the House.
I am reminded, as the hon. Gentleman has mentioned compensation—which is a central part of the Bill—that hon. Members must bear in mind the fact that there is a world of difference between arriving at a figure of compensation with a measure passing through Parliament in the background, and negotiations taking place at arm's length, so to speak, between councils, with, in this case, Havering, which has existing rights, seeking new rights from the other council. The difference will be clear to hon. Members, and I need not spell it out further.

Mr. Martin Redmond: I understood from previous discussions on the Bill that the question of compensation had been agreed between the two authorities and that, in the first year, it would be "X Y or Z" amount, and in the second year some other amount. Am I correct in that assumption?

Mr. Squire: The hon. Member is right, in as much as the form of words suggested by the Committee was agreed to by the London borough of Havering. If the Bill had not existed and the borough of Redbridge had approached the borough of Havering—as has always been its right—to discuss reasonable compensation for Redbridge opening a market within the statutory distance of six and two thirds miles, it is likely that very different terms would have been agreed—if it were possible to agree any terms. I think that the hon. Member will agree that there is a world of difference between that and agreeing a form of words in Committee, which were suggested to the two parties by the Committee.
The key point about this legislation is that it emphasises the dangers inherent in private legislation, when one tries to take away the established rights of another body, unless the circumstances are unique. However, in this case they are not unique and can be applied in other areas, which leads me directly to the borough of Havering's central concern.
Since 1247, charter markets have enjoyed statutory protection in this country and they have survived with that protection through centuries of legislation—such as the Shop Acts—that has affected other areas of retail trade. The reforms have left the rights of charter markets untouched.
I am not just talking about Romford market. On Saturday, I was in Colchester. I was not part of the mob that ransacked the hall there, although I addressed a meeting in the damaged building one hour later. It is the first time that I have created such an impact before I have spoken rather than as a consequence of my words. In Colchester high street was a sign saying, "Welcome to Colchester, Britain's oldest open-air market," or words to that effect.
Markets are a matter of pride. They give people something to identify with in their community and they are a major selling point, popular with ratepayers and shoppers. They are a major commercial attraction. Charter markets are not just a matter for nostalgia. There are practical common sense reasons why the rights and duties imposed by this age-old legislation are important. If there is a reason to modify the existing rights, it should be done by Government legislation that will affect all such markets.
During an earlier stage of the Bill, it was suggested that the distance of six and two thirds miles is an anachronism—my hon. Friend the Member for Ilford, South


emphasised that in his brief speech. We were told that originally it was the distance that one person could reasonably walk in a day. These days, not many people walk six and two thirds miles—most people have wheels on their four corners. Therefore, there may be a need to review that. Surely there should be an overall change after an analysis by the Government or by Select Committee of all the drawbacks and benefits of such a change.
In 1891, a royal commission recommended the abolition of the rules for the protection of markets' rights. Since then, there have been a variety of Governments of differing political persuasions—I am talking about a time when we still had Liberal Governments—but not one has sought to implement the commission's recommendations. To the contrary, the Food Act 1984 specifically reserved the existing rights of markets against rival markets. If we ponder the reason, we may conclude that it was because this is a complex issue and because there was concern about whether compensation rights could be accurately and fairly calculated.
With more than 250 markets dotted around the country, this issue may have been brought to the attention of the House many times since the original report was produced, but apparently not in such a way as to convince any Government of the necessity of such legislation. To make the analogy perfect, it seems to me that, if angels fear to tread—although I hesitate to apply the word angel to any Government—we should be fearful in case we turn out to be fools rushing in.

Mr. Redmond: I think that the hon. Member is making a valid point. Because of the effect that the Bill will have, perhaps the Government should consider overall legislation. A Select Committee could study the matter in greater depth. We may be discussing one small insignificant market, but it has great importance to the borough. I am not sure that we should destroy something that has existed for centuries and has proved such a useful place for people to congregate and to do their work. Perhaps the hon. Gentleman could convince his hon. Friend the Member for Ilford, South (Mr. Thorne) who is sponsoring the Bill, to withdraw it at this late stage. I am sure that the House would appreciate that.

Mr. Squire: I share the sentiments behind the hon. Gentleman's remarks. Obviously I am not privy to discussions that might have taken place between my hon. Friend the Member for Ilford, South and my hon. Friend the Under-Secretary of State, the Member for Southampton, Itchen (Mr. Chope). I can only guess at them, but I hope that even at this late stage the Under-Secretary may feel able to contribute to the proceedings in a marginally more lengthy fashion than he has done on previous occasions.
To give some idea of the scope of the Bill, Ilford and Romford are major shopping centres which attract a substantial number of people. We are talking about a new market, which would have 80 stalls and would be open for six days a week—which is equivalent to 480 stalls. The market does not have to open six days a week, but the Bill allows it.
At an earlier stage in our consideration of the Bill, we discussed how many days it would be open, and it has been broadly agreed that it would be for six days. That will have a substantial impact on the market in Romford, which has 600 spaces—although, as we have said before, it has nearer

300 traders—and is open for three days a week. There will be two large markets. The new market will be smaller, but by any standards it will make a significant change in the existing situation.
I can assure hon. Members on both sides of the House that, despite changes to improve the Bill that I have mentioned, Havering council remains totally opposed to it. Some hon. Members may have received a note from the council this week. Unlike so many matters discussed in the Chamber or by local authorities, the council is not divided on party lines on this issue. The letter from the borough of Havering is signed by the leader of the council and the leader of the opposition. I know for certain that if the council had so chosen, it could have got the leaders of other groups within the council to sign the letter—for example, the ratepayers and the SLD. There is unanimity.
That is quite different from the position in the London borough of Redbridge. Technically, it is not covered by the Bill, but it is important to refer to Redbridge when we analyse the thinking behind the proposal and the relative strength of opinion in Redbridge and Havering. The London borough of Havering, which covers Romford, believes that the market is bad news. However, such an opinion could be dismissed by people saying, "You would say that, wouldn't you? You are arguing on behalf of rights that you hold and you are trying to defend them." There is nothing wrong in that; I am sure that others would do the same. However, in this Third Reading debate—the last time that it will be possible to put this on record—it is important to underline the views of the National Market Traders Federation.

Mr. Alan Meale: One of the main reasons why the council is opposed to the market relates to the standards that have been achieved in the market and the protection that that affords to consumers and ratepayers. The National Market Traders Federation believes that consumer protection, which it took many generations of market traders to achieve, will be diminished. The hon. Gentleman ought to consider whether the benefits of die present system should be preserved.

Mr. Squire: It is unquestionably true that in no small way the value of the market has been built up by means of the skill and care exercised by the existing market traders. There are complaints from time to time; it would be unusual if there were not. However, a high reputation has been built up over the years. It is jealously guarded as a sign of quality. The market traders want to preserve that high reputation. The hon. Gentleman has made a fair and reasonable point. He has underlined the fact that there is more to this than simply trying to hold on to what one has. Certain standards have been created. There is no guarantee that, in the new market, the same standards would necessarily apply.

Mr. Meale: The consumer standards that have been achieved, in co-operation with local authorities, have protected the consumer. If he has either a major or a minor complaint, he knows that it can be sorted out under the existing arrangements. A relaxation of the rules could change all that. Illegal Sunday markets afford no protection to consumers, who in general are the ratepayers in the area and need local authority protection.

Mr. Squire: The hon. Gentleman has made another good point. During a previous stage of the Bill's


consideration, my hon. Friend the Member for Ilford, South said that the Bill would not damage, let alone destroy, Romford market. A number of people in that market may not share his confidence. They are worried that, if there were a downturn in market trade as a result of the Bill, an inevitable consequence would be a drop in standards in Romford market, whatever happened in Ilford market.

Mr. O'Brien: If the promoters of the Bill believe that Romford market would lose trade, what is the position of small shopkeepers who fear that they could be affected by traders in Romford market? They are concerned about their future. Is their future being considered?

Mr. Squire: Is the hon. Gentleman speaking about the small traders in Romford or in Ilford?

Mr. O'Brien: In Romford.

Mr. Squire: The small traders in Romford wholeheartedly welcome the market. They believe that it adds to the attractions of Romford in general and that therefore it benefits them. I do not know what the small shopkeepers in Ilford think. A few small traders in Ilford may not want a market, but it would be wrong if I were to suggest what the small shopkeepers in Ilford might or might not think.
The views of the National Market Traders Federation are important. It would welcome an opportunity to increase its membership, just as a trade union official would welcome an opportunity to increase membership. He would take every opportunity to do so, unless the circumstances were so unusual that he would be justified in not doing so.
The National Market Traders Federation represents market traders throughout the country. It says, "We don't want it; we don't like it." It recognises the direct link between the Bill and any future legislation. It has pointed to some of the complications. Both British Rail and London Underground are rumoured to be interested in setting up Saturday and possibly Sunday markets. They would use as marketplaces car parks that during the week are available for commuters' cars. In isolation, that sounds perfectly reasonable, but one ought to think for a moment about the considerable impact of such a proposal.
A Bill could be introduced for the establishment of a market on each car park. The arguments that could be advanced against such a proposal could not be advanced if the Bill were passed. Exactly the same principle is involved. It would not be just local authorities that might seek to take trade from existing market traders. Other bodies would be provided with a similar opportunity: their motives might be neither more nor less worthy. I do not understand how one could support one and oppose the other, as the principle is the same.
Without stretching comparisons with British Rail and London Underground too far, British Coal, British Steel and Associated British Ports also have land which could be used for a similar purpose, and presumably could tackle the central defences of the market charter rights by dint of the Bill.

Mr. Vivian Bendall: Is that not the whole reason for placing a Bill before the House?

Mr. Squire: I am not sure that I quite follow my hon. Friend. If he was implying that in each of those cases a Bill could be brought before the House, and, subject to detailed changes on compensation and everything else, would be passed because it seemed to be the natural thing to do, that would destroy market rights throughout the country. Many hon. Members on either side of the Chamber would hesitate before considering that to be good or the way to change those market rights, assuming that they needed changing.

Mr. Meale: It is not a question of Romford and Ilford alone: it affects any market anywhere in the country. If the Bill were enacted it would have a severe detrimental affect on the quality of markets around the country.

Mr. Deputy Speaker (Sir Paul Dean): Order. I am sure that, in responding to that, the hon. Gentleman will remember that we are on Third Reading and we must deal only with what is in the Bill.

Mr. Squire: I recognise your comments, Mr. Deputy Speaker, and I have sought to stick within the strictures that you have rightly laid down.

Mr. O'Brien: Let me draw the hon. Gentleman's attention to the Second Reading debate on 6 June 1989, when the hon. Member for Ilford, South (Mr. Thorne) said:
I hope that that will be the case in other parts of the country, too, in future."—[Official Report, 6 June 1989; Vol. 154, c. 81.]
He was referring to the development of markets in other parts of the country. Even on Second Reading, it was not clear that the Bill would ensure protection. The hon. Gentleman who was sponsoring the Bill stated categorically that he hoped that that would happen throughout the country in future. Therefore, there are dangers, and t he hon. Member for Hornchurch (Mr. Squire) is right to draw them to our attention.

Mr. Deputy Speaker: Order. On Second Reading of a Bill, it is in order to discuss the broad principle, which clearly has implications in other parts of the country. We are now on the Third Reading of the Bill. The debate on Third Reading is much more restricted and must relate to what is actually in the Bill.

Mr. Squire: Clause 3 deals specifically with the establishment of a market which previously would not have been possible without the approval of the House, if it gives its approval, and is central to the entire debate. I shall give my hon. Friend the Member for Ilford, North (Mr. Bendall) an example that he will recognise immediately. At present, black cabs are restricted in number and there is a value attached to having a black cab. Among many reasons, that protects the users of black cabs, as my hon. Friend, who is a good spokesman for that industry, knows very well. A similar principle is attached to market rights which have a value and which are being tackled piecemeal rather than by an overall reform of market rights.

Mr. Bendall: I am not going to get involved in a debate on black cabs, as we shall probably have a debate on them in the not-too-distant future. Anybody wanting to establish a market will have to bring legislation before the House if a local authority refused it on planning grounds. Therefore, the House would have the opportunity to say


yes or no to that Bill. Clearly, if such a proposal would interfere with too many markets close at hand, the House in its wisdom would reject it.

Mr. Squire: I am not quite sure that I have my hon. Friend's faith that a debate which might not be packed out would necessarily embrace the full wisdom of the Chamber. I prefer to rely upon statutes or laws that we pass with general rather than specific application.

Sir Nicholas Bonsor: Does my hon. Friend not agree that it would be a fine irony if London Underground decided that it wanted to establish a market at Redbridge station, which I am sure would be a very suitable place for one? I am not sure that my hon. Friends who are sponsoring the Bill would be able to come back to the House, put their hands on their hearts and say that there was any good reason whatsoever for such an application to be refused.

Mr. Squire: My hon. Friend's point needs no comment from me.
I am sorry that we have strayed but a fraction. I shall sum up the genuine opposition and concern of those of us who seek to defend the existing rights. My best friends here—I may have one or two—would not expect me to defend a totally free and unfettered market. In practice, very few Conservative Members defend a totally free and unfettered market. They may think that they do, but there is usually reason to interject some restraint or protection. I do not have any embarrassment about saying that that is my view, and I apply it here.
If there is no broad need to modify existing rights, how do we justify piecemeal reform? I and others—in particular, my hon. Friend the Member for Upminster (Sir N. Bonsor)—have tried to point out that central lacuna. Members of Parliament unconnected with either borough have come to realise the wider impact of the Bill and to support our opposition to it. Quite simply, we are talking about the compulsory extinction of market rights that have been enjoyed for centuries. We are talking about potentially identical legislation in 285 other constituencies—the constituencies where there is at least one charter market with similar rights. That makes it a bigger issue, and the House would be ill advised to pass the Bill tonight. I ask hon. Members on both sides of the chamber to join me in voting against it.

Mr. William O'Brien: It has been outlined to us that the borough of Redbridge wishes to establish an open market in the township of Ilford. That is not the headline-catching business of the day, and I am sure that the media will be more interested in interviewing those who took part in the previous debate, but we are discussing an important issue that affects local government. It is based on what is happening, what will happen and what could happen in local government if the Bill is enacted in its present form.
The borough of Redbridge wishes to establish a market, and the borough of Havering has the right to a market in the township of Romford, decreed by royal proclamation in 1247 by Henry III, and has the protection of that long-established royal order that no other market can be established within six and two thirds miles of the market

at Romford. That is basically the issue before the House. Hon. Members are being asked to annul that ancient order, thereby allowing the market in Ilford to proceed.
It is alleged that Redbridge borough council is being denied its statutory rights by the ancient law that applies to Romford. Will the sponsor outline the statutory powers that are being denied to Redbridge borough council? I have read the reports, followed the debates on the Bill and considered the evidence submitted to the Committee that considered it, but the statutory powers that are being denied to Redbridge need further clarification.
On Second Reading, the hon. Member for Ilford, South (Mr. Thorne) said that it is proposed that the market should be located within one mile of Ilford town centre, but there are further proposals that it should be established within one mile of Ilford town hall. Concern was expressed that the provisions to establish a market within one mile of Ilford town centre could apply to more than one market, but I understand that assurances have been given that only one market will be established. The hon. Gentleman should give further assurances and should answer hon. Members' questions before they take a final decision about the Bill. I therefore ask him what statutory powers are being denied and to state that no more than one market is proposed.

Sir Nicholas Bonsor: I am grateful to the hon. Gentleman for the line that he is taking, with which I entirely agree. Unless I have not read the Bill properly, it does not specify exactly where the market must be held, which could be significant. I know where the promoters plan to hold it, but nothing in the Bill states exactly where it should be held. The promoters must assure us that they will not subsequently move it closer to Romford market than is currently planned.

Mr. O'Brien: That is important to the people of Ilford, because the House is being asked to accept legislation establishing a market within a mile of Ilford town centre, or is it Ilford town hall? The sponsor should answer that question. Will he give the specific location of the market, which is an important issue that we should consider?

Mr. Dennis Skinner: As we are trying to discover the location of the market, the Bill says, for what it is worth,
The Council may establish a market of not more than 80 stalls on the land shown coloured pink".
Where is the pink-coloured land? Can the market be shifted around? It is on a piece of pink paper. I find it odd that those two Right-wing Tories are promoting a market that is on a piece of pink paper. My hon. Friend the Member for Normanton (Mr. O'Brien) rightly says that the Bill does not specify the location of the market.

Mr. O'Brien: I hope that we shall receive answers to my original question and to hon. Members' supplementary questions.

Mr. Redmond: It is important that the location of the market is clarified. If it was not clarified in Committee, it should be this evening, because it could have an impact on the area. The hon. Member for Ilford, South (Mr. Thorne) knows better than my hon. Friend the Member for Normanton (Mr. O'Brien) the exact location of the market. Hon. Members cannot pass the Bill without knowing where it will be.

Mr. O'Brien: My interpretation of the Bill is that the market will be located within a mile of Ilford town centre, but a further version has been given stating that it will be within a mile of the town hall. Perhaps the hon. Member for Ilford, South will clarify that.

Mr. Thorne: The Opposed Bill Committee considered the matter and approved the site marked in pink on the plan. At present, it is used for car parking. It adjoins council offices and is partly under a flyover across a railway line. As was explained in earlier debates, approval has been given for that site.

Mr. O'Brien: Is the site a mile from the town hall or a mile from the town centre? It is important that hon. Members know the exact location of the market because there is a division of opinion about where it will be established. Perhaps the hon. Member for Ilford, South will clear up that point.

Mr. Thorne: The new £100 million development by Norwich Union and Prudential Assurance is almost opposite the town hall, which most people accept is located in the town centre. The site is about 300 yd east of the town centre and the town hall.

Mr. O'Brien: That at least gives us some idea of the location of the market.
Earlier, the hon. Member for Ilford, South said that, if the House gives the Bill its Third Reading, the planning authority will have to consider planning approval for the market. Therefore, the location of the market must be on record, the planning authority will be aware of it and there will be no opportunity to move it.

Mr. Meale: Contrary to what my hon. Friend the Member for Normanton (Mr. O'Brien) has just said to the hon. Member for Ilford, South (Mr. Thorne), the matter is not clear, but is more complicated than it was before. I have here the statement on behalf of the promoters. It says that the last meeting concerned with planning Ilford town centre was held in 1980, following a long public local inquiry. From the statement, it seems that considerable changes have been adopted since 1980, even to the extent of pedestrianisation and a new bypass link road around the area. I do not know whether the people who attended the long public local inquiry, which was concerned with establishing such a planning opportunity, were aware of what could be done. I do not know whether the pink part of the plan has ever been agreed by the people in the locality.

Mr. O'Brien: I must make it clear to my hon. Friend that the statement to which he referred is the statement that we had when we discussed amendments to the Bill. There are many inaccuracies in that statement, especially on the number of markets that are recorded. I cannot judge or comment on the accuracy of the statement or on whether the people who attended the public hearings are aware of where the site will be. I thought that my question to the hon. Member for Ilford, South was satisfactory, but my hon. Friend the Member for Mansfield (Mr. Meale) has raised a further question, which I hope will be clarified before we move on from this subject. Perhaps the hon. Member for Ilford, South will clear up that point.

Mr. Thorne: The Opposed Bill Committee considered the plans. The pink colouring on the plan shows exactly where the site is to be. That plan has been signed as

approved in front of the Chairman of the Committee, who is a Member of the House. Obviously, the outline planning application did not specify a particular site. The narrowing down of the site chosen was not clear in 1980, but it has now become clear because of the development undertaken by Norwich Union and Prudential Assurance, which, at that time, were not party to this enterprise. They appeared on the scene subsequently. It is partly as a result of their request that the street market is being incorporated.

Mr. O'Brien: I am grateful for that explanation. It is a pity that we do not have the plan on the Table. It would have been helpful for it to be available to hon. Members so that we could look at the issue in detail.

Mr. Skinner: Is that right?

Mr. O'Brien: We do not have the plan before us and I do not know whether there is a copy in the Chamber. If we had had that detail, it would have helped hon. Members' understanding.

Sir Nicholas Bonsor: On a point of order, Mr. Deputy Speaker. I seek your guidance in this matter. Surely when a document is specifically mentioned in a Bill that reaches a Third Reading debate, it should be on record or at least lodged in the Library of the House so that we have an opportunity to make the inspection that the hon. Member for Normanton (Mr. O'Brien) seeks.

Mr. Deputy Speaker: That is a matter for the promoters, and not for the Chair.

Mr O'Brien: That is why we have been requesting the information.

Mr. Gerald Bermingham: On a point of order, Mr. Deputy Speaker. If it is a matter not for the Chair but for the promoters, will you tell the House how hon. Members who are not the sponsors and who are not associated or involved with the promoters are to know what we are talking about? It seems wholly illogical that the Chair can dissociate itself from a fundamental aspect of the Bill.

Mr. Deputy Speaker: That is a point of information. It is not for me to say whether the House knows what it is talking about.

Mr. O'Brien: I understand that there is no copy of the plan in the Library, although I should have to check that with the Library. It is of paramount importance for hon. Members who are not familiar with Ilford or with Redbridge borough that the plan should be made available so that we can study the location of the market.
My particular interest is that the Bill raises a local government issue. The broad principle involved is that we want to ensure that all the relevant issues are explained and dealt with before any decision is taken. Hon Members who are taking part in the debate do not have all the information before them. It is difficult to make a judgment on this issue on Third Reading.

Mr. Meale: I fully agree with my hon. Friend. I am worried now, especially as he has not yet had an answer from the hon. Member for Ilford, South (Mr. Thorne) about the value of the promoters' statement. My hon. Friend has said that the statement is fairly inaccurate. We do not have a copy of the plan and we do not know where the pink marks are. We have a statement that has been


found to be very inaccurate. Surely we cannot consider giving the Bill a Third Reading without any accurate information. Surely we cannot continue at all.

Mr. Skinner: On a point of order, Mr. Deputy Speaker. You have heard from several of my hon. Friends and other hon. Members that there is something missing and that the plan is not here. You have said that it is none of your business whether the plan is here or not. However, it seems that the Bill is inaccurate. Surely we need to look at the plan. There is only one way in which we can collectively look at the plan. There may be only one plan—who knows, there may be none. Let us assume that there is a plan and that the promoters have it. I reckon that it would be a good idea to adjourn the sitting so that we can examine the plan. That seems sensible, otherwise we shall be talking in riddles about the little pink pieces and all the rest of it. Let us adjourn. You will get your name in the history books, Mr. Deputy Speaker. I do not think that you have made such a decision before. You will be in "Erskine May" for ever.

Mr. Deputy Speaker: The debate on Third Reading is quite in order and we should get on with it.

Mr. Bermingham: Further to that point of order, Mr Deputy Speaker. You have said that the plan is not a matter for the Chair. However, we have not seen the plan and we do not know where the little pink area is. I know that the pink area is referred to in the Bill, but how do we know that the area is within the curtilage of the borough? It may be on the edge of the borough and it may have implications for other boroughs. The House cannot be assured that the piece of land is even within the borough of Ilford until we see the plan. My hon. Friend the Member for Bolsover (Mr. Skinner) has made a good point. It is best that we adjourn and consider the Bill another day.

Mr. Deputy Speaker: Those are perfectly legitimate points to be made during the debate, but they are not points of order.

Mr. O'Brien: That does not change matters much, Mr. Deputy Speaker. We are being asked to approve the Third Reading of a Bill and a market in Ilford whose exact location no one, apart from the Bill's promoters, knows. We have been told that the location is marked on a piece of paper and that it is 300 yd east of the town hall, but that could be 300 yd east of Westminster town hall as far as we are concerned. If we cannot obtain satisfaction, we should return to that matter.

Mr. Redmond: I note that the hon. Member for Sheffield, Hallam (Mr. Patnick) is in his place. I am not sure whether he should be here or in Sheffield. Perhaps he ought to go to Sheffield to try to determine who should be manager of Sheffield Wednesday.
I want to deal with the planning aspect of the Bill. If the market is to be located in a specific place, we must assume that outline planning permission has been sought, although clearly the application would come up for more detailed consideration later. If no outline planning permission has been sought, who is to say that the local planning authority will not veto the site? Unless there has been some discussion to determine whether the planning committee is likely to accept the location of the market on

that site, the piece of land we are talking about is surely irrelevant. That has a major impact on the debate. Perhaps my hon. Friend could clarify that point.

Mr. O'Brien: The problem we face is that Redbridge borough is both the planning authority and the promoter of the Bill. Although we have heard that there is a plan with a location on it, I have not seen it and other Opposition Members have not seen it, although the planning authority is the same body as the promoter of the Bill. That is why I register my concern that we have not been able to look at the location of the site.

Mr. Meale: It appears that we are in a dilemma. Why should we take it for granted that the plan exists? As my hon. Friend the Member for Normanton has pointed out, a statement from the promoters has been found to be inaccurate. Everyone knows that that is inaccurate. Is it not possible that assertions about the plan are also inaccurate? Surely we need access to the plan before we can proceed with the Bill.

Mr. O'Brien: My hon. Friend makes a valid point. You have ruled, Mr. Deputy Speaker, that this is a matter for the promoters and not for you. Perhaps I may put it to the promoters that they should place a copy of the plan on the Table before we proceed further with the Bill. That will give them the opportunity to discharge their responsibility—which you Sir, identified—to provide the necessary information. If they fail to provide it, how can they, or anyone else, say that we should support the Bill? It is important that we should have all the details before us.

Mr. Skinner: My hon. Friend has long experience of local government, as do one or two other hon. Members. Let us assume, drawing an analogy, that we have an application for a market in a local authority area. Along come the promoters of the plan. We say, "Can you show us where it will be?" What would happen in Yorkshire, Derbyshire, London or anywhere else if the chief executive of the council said, "I am awfully sorry. We don't know where it is going to be"? He would be a laughing stock. What is more, the local press would go to town and attack that local authority if it considered the project for a moment.
Yet here in Parliament, the promoters, having managed to dodge ordinary planning applications, come along and tell us that they do not know where the market is. If a Labour-controlled local authority had been involved, the plan would have been thrown out within seconds of its appearing on the desk. You, Mr. Deputy Speaker, have said, "Sorry, it has nothing to do with me." The promoters say, "We do not know where it is." Judging by their answers, we cannot tell whether they are on this earth or on Fuller's earth. They are supposed to be knowledgeable, but they tell us nothing. Yet the passage of the Bill continues. I think it is high time it was stopped. It is a charade; we should finish it.

Mr. O'Brien: My hon. Friend the Member for Bolsover (Mr. Skinner) asks a question that no one is prepared to answer. Matters do not improve when further questions are asked, but perhaps a messenger is bringing the plan now.

Mr. Bermingham: There is a plan with a pink square on it, which we cannot see because no one will show it to us. We have been told that, since that plan was drawn, the


Norwich Union has built a large building and another firm has built a large building nearby. There is no guarantee that they have not built on the pink piece of land because those buildings had not been built in 1980 when the public inquiry was held and people at the public inquiry had no way of knowing what would or would not be built. We now have a flyover as well.
How can we know that the bit of land still exists? My hon. Friend will bear it in mind that the traffic problems will have changed and that markets create traffic problems and give rise to access flow and goods delivery flow problems, policing problems and goodness knows what else. Does my hon. Friend believe that the promoters know what they are talking about?

Mr. O'Brien: The mystery continues. Perhaps the hon. Member for Ilford, South now has the information that we seek. If so, I am happy to give way to him.

Mr. Thorne: The hon. Member for Normanton (Mr. O'Brien) is making rather heavy weather of this. Clause 2 clearly states:

"In this Act—
'the Act of 1984' means the Food Act 1984;
'the borough' means the London Borough of Redbridge;
'the Council' means the Council of the borough;
'the signed plan' means the plan signed in triplicate by Mr. George Buckley the Chairman of the Committee of the House of Commons to whom the Bill for this Act was referred, one copy of which has been deposited at each of the following offices:—

(a) the office of the Clerk of the Parliaments, House of Lords;
(b) the Private Bill Office, House of Commons; and
(c) the office of the Director of Administration and Legal Services of the Council."

If hon. Members wish to see that plan, it can certainly be seen in the Private Bill Office. If they wish me to try to obtain the copy from the Private Bill Office, I shall try to do so. If, on the other hand, they want a sketch plan to show where the market is, I can show them that straight away. I can certainly help the hon. Member for Normanton, if that is what really concerns him. I have gone to considerable trouble in the past to explain exactly where the site was located. I think that the original debate was last June.

Mr. O'Brien: I am sorry that the hon. Gentleman thinks that we are making heavy weather of this. I consider planning by local authorities, which are the planning authorities, to be very important. I imagine that, if not in Ilford, in many other areas throughout the country and in many hon. Members' constituencies, planning matters are raised with hon. Members because of the conflict that arises when planning applications are submitted to the local planning authority.
If I want detailed information on this matter, it is because I consider planning issues—the location of sites for buildings, especially commercial buildings and markets—of paramount importance. The market in question may not be operated by the local authority. It could be operated by a private party, nominated by the local authority. If that were to happen, who knows what influence that third party could have on the location of the market? That is why I am insisting that we have more information about the location of the market.
The hon. Member for Ilford, South has told me where the plan is, but I must advise him that there is not one in the Library. Hon. Members who want to inspect the plan have to go to the Private Bill Office to do so. That is a change of our procedures in the House. I had always thought that any information that hon. Members required, relating to both private and Government Bills, had to be lodged in the Library. Indeed, Mr. Deputy Speaker, although you have suggested that there may be a copy of the plan in the Library, we have now been told that it is not in the Library. We have been told that it is in the Private Bill Office or in the offices of the borough of Redbridge. Perhaps we should adjourn to Redbridge to see the plan. It is important that the plan is made available to us.

Mr. Bendall: The Bill has been published in its present form since 23 November 1989, and there has been a plan in the Private Bill Office. Any hon. Member could have gone to the Private Bill Office at any time since last November to inspect the plan.

Mr. O'Brien: This matter has arisen because I read in the report that the market is to be located within one mile of the centre of the town of Ilford or within one mile of the town hall. The hon. Member for Ilford, South has clarified that point, but there has been some confusion about the actual location. We have been told that the market will be located 300 yd west of the town hall, but we have also been told that a further development might be involved. When I came to the House tonight, I thought that the location of the centre of the market was clear and understood. However, since being given answers to some of our questions, we find that the matter has become more complicated. That is why the location or ordnance plan should be made available.
Furthermore, as you, Mr. Deputy Speaker, have pointed out, if the promoters were sincere about providing information on this matter, all the details would have been laid on the Table. However, that is not the case, so we must register our strong objections about the fact that the information that is necessary for the promotion of the Bill has not been presented to us tonight.

Mr. Meale: My hon. Friend is right to be worried about this serious point. If we were to give the Bill its Third Reading tonight without seeing the plan or ascertaining where the pink spot actually is, we might be pre-empting a major planning decision in the borough. We must remember that, in 1980, that council held a long public inquiry. Perhaps things have changed and the pink spot actually lies on the Prudential or Norwich Union buildings. Unless we get this absolutely right, we might be pre-empting a planning decision.
As my hon. Friend knows, a developer could insist on the right to site the market wherever he likes simply because we do not know exactly where the pink spot is. That is ludicrous. We could pass something tonight that would mean that the local authority did not have a right to appeal against a decision of the Department of the Environment. That could cost it tens of thousands of pounds in appeal costs.

Mr. O'Brien: I share the serious concerns that have been expressed. I want our anxiety placed on the record.


We consider the fact that the information has not been available to the House to be a serious diversion from the important issues raised by the Bill.
Earlier, I asked the hon. Member for Ilford, South about the statutory powers that the borough of Redbridge is being denied. He has not attempted to answer that question, so I repeat it—

Mr. Redmond: Before my hon. Friend leaves the planning aspect, I must defend the Private Bill Office. We have recently had cause to take advice and guidance on several occasions from the staff of that Office, who have been excellent. Although I disagree with the way in which private business passes through this place, the Clerks in the Private Bill Office are most helpful.
As little was understood about them, many private Bills were passed virtually on the nod. However, perhaps we should now consider ensuring that plans and drawings are placed in the Library in future, so that hon. Members can study them at their leisure instead of taking up the time of the Clerks in the Private Bill Office. I repeat that I have always found the Clerks there most helpful in providing information.
If you were to follow the point of order that was raised earlier, Mr. Deputy Speaker, and adjourn the House to enable hon. Members to inspect the plan, I am sure that the Clerks would be happy to oblige.

Mr. O'Brien: I do not want to appear to be critical of the Private Bill Office. I am simply saying that that is not where such information should be lodged. It should be lodged in the Library as you suggested earlier, Mr. Deputy Speaker—

Mr. Deputy Speaker: Order. Perhaps I should make this clear. I am sure that the hon. Gentleman does not wish to drag the Chair into this matter. I said that in this case the production of documents and where they are lodged is a matter for the promoters, not for the Chair.

Mr. O'Brien: I accept that, Mr. Deputy Speaker.
I want to move on, because we must consider other aspects and ask some questions before making a decision. When questions about who would run the market were asked earlier, we were told that the market might not be run by the local authority, that a third party, a private operator, might be given the franchise to run the market. Does that principle still apply? The local authority is on record as saying that when—or if—the Bill is passed, the planning application approved, and the market established it might not be run by the local authority. There is a strong feeling that a third party might run the market instead of the local authority. If a third party is to run the market, we must ask why the market will be located one mile from Ilford town centre. Is there something significant about the fact that that is near where the insurance companies are developing a large commercial area?
As the market is being fought for and its promotion by Redbridge borough is costing a lot of money—there is also the question of compensation—there is, therefore, general commercial involvement in the operation of the market. If the market is not to be operated by the borough but by a third party, I must ask the hon. Member for Ilford, South whether the principle of the seven day market also still applies.

Mr. Skinner: My hon. Friend is making a good point. Third-party ownership is becoming very prevalent. I am not for a moment suggesting that the Redbridge market can be compared to Harrods. We all know that Harrods was supposedly taken over by the Al-Fayeds, but some of us—at least on the Opposition side of the House—know that the real money came from the Sultan of Brunei, who happened to be a "friend" of the Thatcher family.
My hon. Friend has referred to the doubt as to whether the site is a mile from the town centre or a mile from the town hall. That is the kind of variable which will enable the third party to say, "Never mind the local authority—we are the boys who are moving in here." A lot of that goes on in the Tory party. It may be that there will be money in this for the Tory party—money from one of these local entrepreneurs making a killing before the Government are kicked out at the next election.

Mr. O'Brien: We must have some clarification of who will run the market. When the matter was discussed previously, the question of the council's having a third-party option was raised. The point was made that, if the council were to change politically, the decision could be reversed and the whole issue would be in the melting pot. Can the hon. Member for Ilford, South tell me whether that principle still applies? Does the local authority contemplate offering the franchise to the highest bidder? There is some doubt.
We want to be sure that markets are run properly. The hon. Member referred to markets which had been run badly and to communities which, as a result, had been let down. He said that stalls must be allocated fairly, that there should be no favouritism or nepotism. If there is to be a third party, what kind of vetting will there be? In view of the point made by my hon. Friend the Member for Bolsover, it is very important that this be established.
The majority of markets in boroughs and other towns are run by local authorities. Why is Redbridge council hesitant about running the market? I hope that the hon. Gentleman will be able to answer that question. On Second Reading he said:
Well run markets are an encouragement.
If that is correct, why does not Redbridge council intend to run this market? On Second Reading, referring to the demand for a market in Redbridge—this is a very important point—the hon. Member said:
I hope that this will be the case in other parts of the country, too, in future.
In other words, he hopes that if the Bill is passed it will be the pattern for future developments throughout the country.
What is being proposed is the abolition of ancient market rights. If that is the principle behind the Bill, I want to be very cautious about it. In several constituencies the ancient order is protected. If what the hon. Member for Ilford, South has said is correct, that protection would be removed. Having listened to his comments, I fear that that is one of the purposes of the Bill. I wonder what he meant when he said:
I hope that this will be the case in other parts of the country, too, in future.
If there is any question of abolishing ancient market rights, the Bill involves something much wider than the boroughs of Redbridge and Havering.
I should like to know whether the Minister believes that the issue is much wider. As he and other hon. Members know, local authorities are the main providers of markets


in cities, towns and rural areas. We must be assured that there is not behind this Bill any purpose other than the Redbridge promotion. Hon. Members must be clear about the purpose of the Bill and about what its outcome is likely to be.
On 6 June, in answer to a question by my hon. Friend the Member for Bolsover, the hon. Member for Ilford, South said:
As I said before, the chamber of trade and local shopkeepers have indicated that they are in favour. They find that an open-air market, especially one of modest size, encourages trade because it encourages people to come into the local area.
But we were told earlier tonight that this will be a covered market. In other words, there has been a change of plan already.
On 6 June the hon. Member for Ilford, South continued:
we can expect shopkeepers in future to view open-air markets in a different light. I am certainly not saying that every single shopkeeper in Ilford is in favour, but I have not had my attention drawn to any who have indicated dissent, whereas I have confirmation from the chamber of trade and others that they are very much in favour. After all, it was the chamber of trade that set out to raise the petition, and it has now collected 6,500 signatures. That was its own idea. I believe, therefore, that the whole tempo is changing in that regard. I hope that this will be the case in other parts of the country, too, in the future."—[Official Report, 6 June 1989; Vol. 154, c. 81.]
The sting in the tail i the hope that this practice will be extended throughout the country in the future. I hope that the hon. Gentleman will clarify his remarks of 6 June. I suspect that the Bill has implications for markets in all local government areas.
The present Government have attacked local government. They are not local-government-friendly. Is this an extension of that attack? Is this a means of reducing local government influence, especially in respect of markets? I hope that the hon. Gentleman will be able to clarify the point.
The hon. Member for Upminster drew attention to the reference in the Bill to the Food Act 1984. As I asked earlier, if substantial compensation is to be paid will it be possible to use the funds to reduce the poll tax in the borough? If so, the principle could be applied throughout the country. Market areas could be sold with a view to using the proceeds to reduce the poll tax. If that is not the position, I ask the Minister to provide us with some assurances.
There are several issues before us which will have a far-reaching effect on the future of local government. For example, compensation will not be paid to the traders or stall holders who may suffer in the township of Romford. Instead, compensation will be paid to the local authority. It has been suggested that the authority will decide how the money will be spent. That shows that there is not just one view to be taken. We understand from the hon. Member for Upminster (Sir N. Bonsor) that the payment of compensation will be in lieu of the interruption of the lost modern grant. Even the hon. Gentleman could not explain that until he obtained an interpretation. It seems that other local authorities could lose their right to ancient markets for the payment of compensation. If compensation is paid, for what will it be used?
We are not following a precedent. We are not mirroring what has gone before. There is not a simple negotiation between one local authority and another. We are seeing the making of history, inasmuch as the Bill will lead to the royal writ issued in 1247 by Henry III being overturned by Parliament. That precedent can then be applied to any authority which has had similar protection.

Mr. Graham Allen: Is my hon. Friend aware of the numerous representations received from Nottingham city council about the ramifications of the Bill? Mansfield council has also expressed considerable reservations about the implications of the Bill for many other areas. Perhaps my hon. Friend will say something about those representations.

Mr. O'Brien: My hon. Friend has set the scene for a matter to which I intended to refer. In St. Stephen's hall, there is a wall full of coats of arms of ancient boroughs. All those boroughs are likely to be involved in legislation of the kind before us today. As I have said, we are not following a precedent.
The Bill will have an important effect on local government, in which I have considerable interest. I understand that Redbridge councillors are divided on the issue. Some Tory councillors are opposing the location of the market and the way in which it would be run. In other words, there is opposition to the privatisation of the market. I want to know more about that from the hon. Member for Ilford, South. It has been reported that the market is to be placed under a flyover, which raises safety and hygiene considerations. That is one of the many issues that I have raised and to which I hope that the hon. Member for Ilford, South will respond.
When we considered the Bill in Committee we were given an assurance that the market would not operate seven days a week. The Committee was told that the application for seven-day trading had been withdrawn. At a later stage, however, we were told that consideration is to be given to Sunday trading. That is my final question to the hon. Member for Ilford, South. Are we to have a seven-day market? If so, why has the borough gone back on its word, which was given when the Committee considered the Bill? I hope that we shall receive answers to all my questions before the debate comes to an end.

Sir Nicholas Bonsor: I spoke at some length on the Bill on Second Reading and I did so again when it was considered on Report. That being so, I do not wish to detain the House for long.
There has been enough to demonstrate that the Bill should not have proceeded to Third Reading in its present form. Before you entered the Chamber, Madam Deputy Speaker, we had a substantial discussion on whether plans had been lodged in the Library or the Private Bill Office and on the adequacy of those plans. I have been told that there are two plans in the Private Bill Office. That will be of relief to some Labour Members as it is of relief to me and, no doubt, to my hon. Friend the Member for Ilford, South (Mr. Thorne). There, unfortunately, the good news stops.

Mr. Skinner: Are the plans different?

Sir Nicholas Bonsor: I do not know whether they are different, but the scales are different. I am told that one of


the plans bears no scale, which means that it is difficult to determine the area that we are talking about. The second plan has a scale of 1 in to 50,000 in. It is so detailed and so huge that it is almost impossible to grasp the scale of the operation that we are considering. The information That has been prepared and produced to enable the House properly to consider the Bill on Third Reading is woefully inadequate. We were told by Mr. Deputy Speaker, rightly, that that is a matter for the promoters and not for the Chair, but it is a matter that the House must take into account. The promoters have grievously failed to keep us properly informed.
That is the thin edge of the wedge, because the Bill is a shambles from start to finish. I return to an issue that I raised at the beginning of the saga, when the Bill came to the House on Second Reading. I drew attention then to subsection (2), which states:
It would be of public and local advantage to provide for the establishment of a market in the part of the borough known as Ilford notwithstanding the infringement of noncompliance thereby with any rule of law or enactment.
That is an appalling subsection to have in any Bill. I said on Second Reading that it is extremely bad that the private Bill procedure should allow the rights of a local authority or another party to be taken away.
If that is to be done, it should be by way of a Government-sponsored measure, with all the departmental paraphernalia behind it. Such a removal of rights should not be sneaked in under the hem of the House by the use of a procedure that does not provide the review to which a Government Bill would be subject. It is unfortunate that the attention of the House is not focused on the important issues that are raised by Bills that pass through the House under the private Bill procedure.
Following on from subsection (2), it is claimed as a matter of fact that it would be of public and local advantage to provide for the establishment of the market. I challenge my hon. Friend the Member for Ilford, South to demonstrate how it would be to the public advantage for Ilford to have a market that would be in competition with that which has been established in Romford for 750 years.
I have not been able to find—I am sure that my hon. Friend the Member for Ilford, South, who is now looking through his papers to assist me, will be able to help—in my Acts that I have looked at today the words "public advantage" interpreted in legal terms. Yet we are asked to accept blindly that this Bill is to the public advantage. The House should not contemplate passing such a Bill without being informed what these words are supposed to mean. I am accustomed, as a former practicising lawyer, to the phrase, "in the public interest". In so far as public advantage and public interest are the same, the Bill must be alleging that it is, in the wide sense of the phrase, in the public interest that the Bill should be put on the statute book. My hon. Friend will be in the gravest of difficulties if he fails to establish that that is indeed the case.
As all hon. Members will know, in English law the preamble to the Bill is not part of the statute. Therefore, in the English courts, Havering will not be able to take the point against it that that phrase is meaningless and has not been established as an original and necessary part of the Bill. That is not the case under European legislation, where the preamble is part of the legislation and is interpreted by the courts as part of the Act.
The European convention on human rights states that no one should be deprived of his possessions except in the public interest and subject to the conditions provided for by law. I take no issue on the second half of that, because, if the House is so foolish as to allow the Bill to proceed to the statute book, clearly that will be satisfied and the provisions of the law will be provided for. But I challenge my hon. Friend to satisfy us that it is in the public interest that the Bill should proceed. I warn him that, if he fails to do so and if Redbridge should fail to do so later, it may well be that the European Court of Human rights and not the House will decide whether the Bill has any legal importance or should be ignored.

Mr. Harry Cohen: The hon. Gentleman will appreciate that it was decided in Committee that 10 per cent. of the profits of the market should go to Romford as compensation. One must consider how that will be calculated. My understanding of markets is that it will be immensely difficult to decide what the profits are. I appreciate that the hon. Gentleman represents Romford's interests, and so is keen for all that money to go to Romford, but does he not agree that there might be a case for the 10 per cent. to be divided among the surrounding boroughs of the Ilford market, in which case my borough of Waltham Forest would get a share? Does he not think that that is a good idea?

Sir Nicholas Bonsor: The hon. Gentleman always comes up with some extremely interesting and stimulating thoughts whenever he intervenes in the House, but I cannot always agree with them. I can see absolutely no justification for Leyton receiving any of the compensation that my borough will receive.
However, the hon. Gentleman makes a good point when he refers to the difficulty of establishing the amount of compensation that should be paid. I am sure that my Friend the Member for Ilford, South will clarify that position, because I cannot see that the 10 per cent. can be assessed on a fair and proper basis as Romford's compensation for the loss of this right, even if I were to accept that 10 per cent. is the proper figure.
While I accept that Havering borough council has negotiated that figure and therefore, in so far as I represent its interests, I cannot quibble, speaking as an individual Member of Parliament I have to say that I am not sure that 10 per cent. represents anything like adequate compensation for taking away rights enjoyed for 750 years, in the way that the Bill seeks to establish. This seems to me to be a sneaky and underhand way of getting underneath and behind what the House has done on the broader issue.

Mr. Redmond: While it is true that the council will get 10 per cent. in compensation, it is not clear to me what the council intends to do with it. If the new market takes off and starts attracting business away from the old market, the surrounding shopkeepers will suffer from loss of trade. It might be appropriate to look into the future, to see whether they should be covered by some form of compensation. Given that the vast majority of traders live on the borderline between survival and failure, consideration should be given to compensation for the possible long-term effects.

Sir Nicholas Bonsor: I take the hon. Gentleman's point. Of course, I cannot speak for the council as to how it will use the money, and it would be wrong for me to do so. Just


as, when the council sells something voluntarily, it is not for me to tell it how it should use the proceeds, so it would not be proper to speculate at this stage on how the council might use the money. Anyway, there are council elections coming up, so whatever assurances I might give for the current Conservative-led council, I could not be 100 per cent. Certain—99 per cent. perhaps, but not 100 per cent.—that the council that will run Havering after the elections will be of the same mind as the present council. But I have no doubt that whatever council is in power at the time will bear in mind the needs of those who are being deprived of trade because of the market.
The hon. Gentleman is also right to say that that is an inevitable consequence of allowing the Bill to proceed. I shall come back to that later, but, as it has been raised, I must say that I find it very strange that my hon. Friend the Member for Ilford, South attempted in previous debates to give the impression that this market will not harm the Romford market at all. Having a market that could be open six days a week six miles away is bound to hurt the Romford market.
So my first point is that the Bill is a shambles and is in a very poor form, that the preamble is a disgrace to draftsmanship and that the Bill should not have come back on Third Reading in a form that was heavily complained about on Second Reading, and having been altered not a jot.
But the principle is much wider than that. It was touched upon on several occasions earlier, so I need do no more than stress it. That this will set a precedent on which other markets will be threatened is, I think, unchallengeable. I asked my hon. Friend the Member for Ilford, South earlier how, if British Rail or the Underground decided that it wanted to put a market somewhere on its land in Redbridge, he could come back to the House and say that there was any good ground for challenging it. That applies to anybody else who might want to set up a market in Redbridge.
Unless there is a proper balance between the rights of traders to trade where they wish to trade and the rights of the councils and the operators of the markets to protect the traders who are trading in their area, clearly we shall go through a swing of supply and demand, whereby markets are put out of business because there is a surfeit, and then there are not enough markets, and neither the consumer nor the market trader can conceivably benefit from that.
My hon. Friend the Member for Mid-Worcestershire (Mr. Forth) the Under-Secretary of State for Industry and Consumer Affairs supports the proposal, and the Government have shown, certainly in principle, that they do not particularly like charter markets and would like to see more markets set up, and that is where the mistake is being made. As with any shopping area within a council's district, it is important that a balance of trade be maintained. It is no good having nothing but greengrocers all the way down the high street. That is why the council's position is defended by its having the right to refuse a change-of-user application for a shop currently used for a specific purpose.
Much the same applies in this case, but on a much grander scale. A 750-year-old established market is being threatened by a proposed new market within the same

trading area. I am sure that my hon. Friend the Member for Ilford, South would not dispute that it is within the same area. Indeed, he could not do so, because that very fact formed part of the case put by Redbridge council. Its counsel said in evidence to the Committee:
Fifty seven per cent. of people who are Ilford shoppers, that is people who are shopping in Ilford, go to Romford to shop in its market.
How can my hon. Friend claim that the proposed market will not hurt Romford market when 57 per cent. of those who shop in Ilford use the Romford market? If the proposed market opens, that 57 per cent. of shoppers will, understandably, switch their allegiance to the Ilford market.
I do not dispute that it is in the interests of those shoppers to have a market in Ilford, assuming that that market could match the standard that the Romford market has established—a rash assumption. Although the proposed market might be in the interests of the Ilford shoppers, at what cost—not only to my constituents and those who shop in Romford and do not live in Ilford, but to the traders at Romford? If the Bill is passed, it will have a deep and damaging effect on the trading area which includes Ilford and all the boroughs around it, including that represented by the hon. Member for Leyton (Mr. Cohen).
It is important that the House understands that we are talking not only about the interests of Havering and Ilford, but about a vast number of people, all of whom have cars and all of whom shop in Romford market to their great advantage. It is a market of supreme quality which operates in a way that could not be matched and it would be severely threatened by the new competition that would be introduced by Redbridge.

Mr. Cohen: The hon. Gentleman is making an interesting point, but I wish to clarify his views. If the proposed market were established, does he think that there would be over-provision of shopping facilities in that area of London, which would result in some of those markets and traders going broke and jobs being lost?

Sir Nicholas Bonsor: That is certainly my view. I do not doubt that a new market would hit traders who are currently trading profitably in Romford, and who could not obtain a stall in Ilford because there would be fewer of them. Their businesses would be eroded to a point where neither stalls in Romford nor competing stalls in Ilford could operate profitably. That would not be in anybody's interests.
I fear that Ilford market, with its 80 stalls, will open with a great fanfare of trumpets, trade for six days a week, then four days, then two, and then close because it will not be a profitable enterprise. It cannot survive on the 57 per cent. of Ilford shoppers who currently use Romford market. The Romford shoppers, who form a much larger number, will not go to Ilford. Unless there is a centre, as there is now, where everyone in the area goes to shop, neither market will survive in the long term, and certainly not if they are to provide the present quality.
That is why the charter market rights were originally granted. Many things change over the centuries, but the fundamentals of trade do not. The protective rights were given precisely because markets could not otherwise operate profitably. The king of the day realised that in order to have properly operating markets serving the people of the country and established at the right points


around the country, he had to grant protective rights so that those markets could not he undermined in the way that the House is likely to allow today.

Mr. Bendall: Can my hon. Friend explain why there are so many successful markets in close proximity to one another in east London? I have asked that question before.

Sir Nicholas Bonsor: There is sufficient demand in east London, but that is not the case in Romford or Ilford. The figures that I have given prove that. If the 57 per cent. of Ilford shoppers who currently come to Romford market cease to do so, that must damage Romford. If only 57 per cent. of Ilford shoppers shop at Ilford market, that will not be sufficient to sustain that market.
It may be that in a few years I shall be proved wrong. If the Bill is passed today, I hope that that will be so, but there has not been enough research into the matter. The House is being asked to do something that has never been done before, and it has not been given sufficient information to make such a major decision.
The only other occasion on which a market has had its rights undermined was in Bexley in 1977, and that was by mutual consent. There was no challenge from the market whose rights were being undermined. It withdrew its petition and—probably because of enormous compensation, although I do not know the facts—felt that it could live with the removal of its rights. However, that is entirely different from what we are being asked to agree to today. It is the difference between a voluntary marriage and a shotgun marriage. If the House knew the full facts, I am sure that it would not contemplate proceeding on the basis that the Bexley matter was resolved satisfactorily.
Another point which has come out of our debates is that the procedure for private Members' Bills must be reformed. It is unacceptable for one local council to make such a move against a well established market and proceed through the house with most hon. Members having no idea of the implications. My Hon. Friends and I have attempted to alert people to that fact but, as with so many things, the British people tend to shrug it off until it actually hits them in the solar plexus.
If the Bill is passed, and if—as I suspect—another similar Bill is brought before the House, I gaurantee that there will be an outcry because the second time around people will be alert to the danger and will realise that it is not just a one-off application. I am afraid that most hon. Members do not understand the implications—

Mr. Skinner: There are not many hon. Members here.

Sir Nicholas Bonsor: Indeed, but there were even fewer on Report, when we were trying to make some sensible changes to the Bill, and fewer still on Second Reading, when we might have had a better opportunity to stop the Bill in its tracks.

Mr. Cohen: Will the hon. Gentleman speculate on the cost of this private Bill procedure to date, and on its likely cost when it is completed? Does he agree that that money would be better spent keeping down rent levels in Redbridge, which are currently rising by £15-plus per week? That is way above the national average.

Sir Nicholas Bonsor: Not only do I agree with the hon. Gentleman, but I find it hard to imagine any way in which money could have been worse spent. There has been enormous expense of time and trouble in the House, and

the petitioners and everyone else involved have had to pay large sums because of the procedure that has been implemented. I hope that if we do not succeed in stopping the Bill from proceeding in this House, the job will he done in the other place, in which case even more money will have been expended and the whole thing will have been a thorough waste of parliamentary time and of a huge chunk of community charge payers' money.
The procedure whereby private Bills can go through the House in this way should be reviewed, but it would be uncharitable of me not to concede that some changes were made for the better when the Bill was in Committee, to four of which I draw the House's attention.
The first is that only the council can now establish the market. There was originally the threat that anyone could establish the market and the council would be unable to stop it; now at least the council can stop it, although I am not at all sure that there are adequate safeguards to prevent the council from assigning its rights and allowing the market to be improperly run by a third party at a later date. That is a worrying aspect, which should be considered at some stage—it may well have to be in the other place.
Secondly, the market can no longer be put anywhere. We examined that substantial worry at length earlier. The pink blob on the map, when we have deciphered the extent to which the scales can be read, will, I hope, show that at least the market can be established only within a fairly narrow area and cannot be moved later to a place that might cause more damage to local interests.
Thirdly, the compensation is better than it was, but the hon. Member for Leyton raised a good point about that, and there is no doubt that it will be extremely difficult to assess the proper figure, of which 10 per cent. will come to Havering council. Finally on the plus side, there can now be no disposal of those rights without the consent of Redbridge council.
It is essential to defeat the Bill. I hope that hon. Members on both sides of the House will join me in making sure that it proceeds no further.

Question put, That the Bill be now read the Third time:—

The House divided: Ayes 48, Noes 43

Division No. 138]
[9.01 pm


AYES


Arnold, Jacques (Gravesham)
Irvine, Michael


Ashdown, Rt Hon Paddy
Jack, Michael


Beith, A. J.
Jones, Gwilym (Cardiff N)


Bendall, Vivian
Kilfedder, James


Boswell, Tim
King, Roger (B'ham N'thfield)


Bright, Graham
Knox, David


Brown, Michael (Brigg &amp; Cl't's)
Mans, Keith


Campbell, Menzies (Fife NE)
Mitchell, Sir David


Carlisle, Kenneth (Lincoln)
Monro, Sir Hector


Chapman, Sydney
Paice, James


Clark, Sir W. (Croydon S)
Riddick, Graham


Davies, Q. (Stamf'd &amp; Spald'g)
Ross, William (Londonderry E)


Davis, David (Boothferry)
Skeet, Sir Trevor


Dykes, Hugh
Stanley, Rt Hon Sir John


Fookes, Dame Janet
Stevens, Lewis


Forth, Eric
Taylor, John M (Solihull)


Franks, Cecil
Thompson, D. (Calder Valley)


Gorman, Mrs Teresa
Thompson, Patrick (Norwich N)


Hamilton, Neil (Tatton)
Thorne, Neil


Harris, David
Thurnham, Peter


Haselhurst, Alan
Twinn, Dr Ian


Hayhoe, Rt Hon Sir Barney
Walker, Bill (T'side North)


Holt, Richard
Waller, Gary






Wood, Timothy
Tellers for the Ayes:


Woodcock, Dr. Mike
Mr. Allan Stewart and Mr. James Arbuthnot.




NOES


Allen, Graham
Illsley, Eric


Alton, David
Jones, Ieuan (Ynys Môn)


Atkins, Robert
Jones, Martyn (Clwyd S W)


Barnes, Harry (Derbyshire NE)
Lofthouse, Geoffrey


Battle, John
Loyden, Eddie


Callaghan, Jim
McKay, Allen (Barnsley West)


Clark, Dr David (S Shields)
McWilliam, John


Cook, Frank (Stockton N)
Martlew, Eric


Crowther, Stan
Meale, Alan


Davies, Ron (Caerphilly)
Neubert, Michael


Dixon, Don
O'Brien, William


Eastham, Ken
Patchett, Terry


Flynn, Paul
Pendry, Tom


Foster, Derek
Powell, Ray (Ogmore)


Fraser, John
Redmond, Martin


Gill, Christopher
Short, Clare


Godman, Dr Norman A.
Squire, Robin


Golding, Mrs Llin
Widdecombe, Ann


Gregory, Conal
Wise, Mrs Audrey


Hawkins, Christopher



Haynes, Frank
Tellers for the Noes:


Home Robertson, John
Sir Nicholas Bonsor and Mr. Dennis Skinner.


Hood, Jimmy



Hughes, John (Coventry NE)

Question accordingly agreed to.

Bill read the Third time, and committed.

Penzance South Pier Extension Bill

Order for Second Reading read.

Mr. David Harris: I beg to move, That the Bill be now read a Second time.
I hope that this will prove not to be a controversial measure. Its objects are set out in the explanatory statement, which has been made available to hon. Members, and the plans for the proposed works have been properly deposited according to the Standing Orders of the House applying to private business.
The Bill is sought by Penwith district council, which operates and owns Penzance harbour. The measure has two objectives. It was found some time ago that the structure of the south pier was in a poor state, and I regret to report that it has deteriorated further owing to the recent storms. It was thought that, when shoring up and improving the structure of the wall, it would make sense also to build works which could be used for a car park with 320 spaces.
The council decided to promote the Bill last year and to authorise its director of housing and public services to draw up detailed plans and proposals to bring forward this joint enterprise.
The estimated cost of the whole project is some £1,750,000. The director of housing and public services has consulted widely—with the Nature Conservancy Council, the Cornwall Trust for Nature Conservation, Cornwall county council's surveyor and with English Heritage.

Mr. Martin Redmond: I wonder whether the hon. Member can answer the following questions in his preamble to the Bill. Can the facilities be used for the import of coal? Why was it necessary to have so many Lords amendments to the Bill? Why is the director of housing involved when one would have expected the project to come under some other local authority committee?

Mr. Harris: To answer the hon. Gentleman's last point, the director of housing is also the director of public services. I suppose that he fulfils the role of what used to be, to use old-fashioned council terms, the borough surveyor when Penzance had a council of its own. He now fulfils joint roles. Penwith district council is extremely efficiently run and has combined a number of posts.
I had intended to mention coal later. The harbour works can in no way be used for the importation of coal, so I can reassure the hon. Member about that.

Mr. James Hill: Thank you, I can leave the Chamber now.

Mr. Harris: I urge my hon. Friend to hang around a little longer.
As I was explaining, the council has consulted widely and no petitions were presented. In reply to the intervention by the hon. Member for Don Valley (Mr. Redmond) about Lords amendments, I think, with respect, that he may be confusing this Bill with another Bill promoted by Penwith distist council which received Royal Assent a few weeks ago and to which there were a number of amendments in the other place. The Bill that we are discussing today has not yet been to another place. I hope I have reassured him about that.
No petitions have been lodged against the Bill, although I received one letter from a constituent, Mrs. Primrose May, who wrote to me on 29 January saying that she opposed the Bill. Mrs. May is an officer of the Penzance Waterfront Society. Unfortunately, her letter arrived on 30 January, which was the last date for presenting petitions against the Bill in this place. However, I wrote to Mrs. May explaining that she would have an opportunity to petition against the Bill in another place when the Bill goes there, as I hope that it will, and I have fully informed her of her rights.
The society that Mrs. May represents has been concerned about the council's plans to redevelop the harbour area. The Bill is not connected with those plans. As I explained earlier, it is primarily concerned with the safety of the pier and the provision of car parking spaces.
The hon. Members for Don Valley and for Denton and Reddish (Mr. Bennett) have tabled the motion
That the Bill be read a Second time upon this day six months.
I hope that I have reassured the hon. Member for Don Valley that this project could not be used for the importation of coal. I believe that to be his primary concern.

Mr. Redmond: I am concerned about the importation of coal. Jobs in my constituency would be affected. The importation of coal would also affect the national interest; the country cannot afford large imports of fuel. After I became interested in two other private Bills, I noticed that a series of private Bills was going through this place on the nod. I am convinced that 95 per cent. of them ought to be the subject of local planning procedures. There are two aspects to the objection. I do not want the hon. Gentleman to misunderstand it.

Mr. Harris: I do not misunderstand the objection. I had intended to say that in addition to the hon. Gentleman's objection to certain Bills, I recognised that both he and other hon. Members are concerned about the private Bill procedure. The hon. Member for Denton and Reddish has drawn attention to its drawbacks. He knows that assurances have been given by the Lord President of the Council to review the private Bill procedure. Let me say, not as the Parliamentary Private Secretary to the Lord President but as the Member of Parliament for St. Ives, that I share many of the hon. Gentleman's concerns about the handling of private legislation.
Hon. Members may think that the private Bill procedure is a means of circumventing the normal planning procedures. I therefore draw their attention to the provisions in the Bill which make it crystal clear that the normal planning procedures will have to be gone through before the works can be carried out. There is a further safeguard—that before any works can be carried out the council must obtain the Secretary of State's approval. He will have the power to lay down all sorts of

conditions. A planning application has been advertised in the last few days, or is on the point of being advertised, which will give local people, particularly Mrs. May and the members of her society, the opportunity to make representations about the Bill.
My objective is to try to ensure that the Bill is given a Second Reading. Those who object to it will then have an opportunity to object in the proper manner and, if they wish to exercise it, the opportunity to object to the planning application. With those safeguards, I ask the House to give the Bill a Second Reading.

Mr. Martin Redmond: I wish to raise just one point for clarification. Why did the House of Lords seek to amend the Bill? I should be most grateful if the hon. Gentleman would intervene and clarify that point.

Mr. Harris: I have tried to explain to the hon. Gentleman that he is confusing this Bill, which has just started its procedure through the House, with a previous Bill published by Penwith district council—the Penzance Albert Pier Extension Bill. That Bill was amended in the House of Lords. This Bill has not yet gone to the other place. It has just started its procedure through this House and will go to the other place later. The hon. Gentleman is confused between the two Bills.

Mr. Redmond: It says here, "Penzance Albert Pier Extension Bill, Lords amendments."

Madam Deputy Speaker (Miss Betty Boothroyd): Order. We are dealing with the Penzance South Pier Extension Bill. "South Pier Extension" are the operative words. Mr. Harris, you have the floor.

Mr. Harris: I hope that I can reassure the hon. Member for Don Valley that there are two Bills. One is now an Act. It has completed its passage through both Houses of Parliament and received Royal Assent about a fortnight ago. That is the Bill to which the hon. Gentleman is referring—the Penzance Albert Pier Extension Bill. This is the Penzance South Pier Extension Bill. There are two Bills and two piers and two quite different schemes. One was amended in the House of Lords, but the one that we are dealing with now has just started its proceedings through Parliament and has not yet reached the other place.

Mr. Redmond: I apologise. I asked the Vote Office for the Bills and was given them. I was not interested in the previous private Bill and I did not check it as I should have done. I humbly apologise.

Question put and agreed to.

Bill read a Second time, and committed.

Madam Deputy Speaker: There being no Member of the Committee of Selection present, the two motions on employment and foreign affairs are not moved.

BISF Houses (Nottingham)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Kenneth Carlisle.]

Mr. Graham Allen: While we are in the mood for apologies, this is the first time that I have spoken since the count at the end of the debate on Members' interests. I should like to apologise to you, Madam Deputy Speaker, for any discourtesy deemed to have taken place on that occasion.
An adjournment debate is extremely valuable for a Back-Bench Member. I have been fortunate enough to have raised a couple of Adjournment debates in my brief time in the House, and I have chosen subjects that I felt were important—a written constitution and the role that the House of Commons should play in our democracy. Tonight, fortunately, I have drawn the Adjournment debate again, and I have chosen a different topic, but one of great importance to many of my constituents and to constituents in a number of other places throughout the land.
A large number of people throughout the country live in steel-framed homes either as residents, having purchased those homes, or as council tenants. In my constituency, people were advised, encouraged and cajoled by the Conservative Government to buy the council houses in which they were existing tenants. For many, the knockdown prices under the right-to-buy legislation meant a windfall and a dream come true, which enabled them to buy their own homes.
For my constituents who bought those BISF houses, the promises have proved to be hollow. They are the victims of the Conservative Government's right-to-buy policy. They have bought a pig in a poke. Many wish to move but cannot do so. Even when willing buyers are found, they are not regularly being granted mortgages by local building societies because of widespread suspicion among people, including building societies, that the properties are defective.
That is the nub of the problem, about which the Government should clearly state their view. If the houses are defective, they should be put on the list of designated designs, thereby enabling the payment of grant to bring them up to scratch. If they are not defective, the Government have a moral duty to ensure that building societies are told in clear terms that they should lend on them so that they can be sold.
Currently, neither option is being put into effect. Thus, my constituents and thousands of others throughout Britain are trapped. They are prisoners in their homes, unable to move or to sell. They are caught with houses of which the widespread view is that they contain serious defects. I underline the fact that those people do not share the Conservative dream of home ownership. Indeed, for many of them it has become a nightmare from which they cannot wake and escape.
Far worse than that is the problem that those people are being denied any hope of changing their circumstances. That is largely due to the behaviour of the Government and—I make no apology for saying—of the Under-Secretary of State for the Environment. I believe that he has behaved appallingly, and I hope that tonight, having been dragged to the House by the award of this Adjournment debate, he will make his position quite clear.
I shall substantiate my view, and if the Minister is magnanimous enough to change his mind, I shall be the first to praise him in Nottingham and elsewhere. If he does not do so, I promise him that this campaign will continue until he does justice by my constituents and people elsewhere.
Having encouraged people to buy their council homes, the Government have walked away from the problem. Their attitude is, "You bought, it's your fault, you take the blame and we shan't help." The Minister has refused to meet not merely me but other Members of Parliament and peers. [Interruption.] He is chuntering from a sedentary position, but if he disputes my comments, I shall gladly give way to him.

The Parliamentary Under-Secretary of State for the Environment (Mr. Christopher Chope): Will the hon. Gentleman refer to the meetings that he had with the then Under-Secretary with responsibility for housing, who considered the subject exhaustively with him? I hope that he will do so quite soon and put the matter in context. It has been discussed frequently by him and my Department, and offers have been made. One of his colleagues accepted an invitation to visit the building research establishment, but he refused that invitation. He is now making wild allegations and trying to throw mud not only at the Government but at me. I hope that he will play fair this evening.

Mr. Allen: I will take no lectures from the Minister about playing fair. However, I shall put the record straight. I have made no wild allegations. I have made specific charges against the Minister and he has refuted none of them in his intervention. If he wishes to refute any charge, I shall gladly give way and he can then substantiate his accusation about "wild allegations".
The Minister's predecessor, the hon. Member for Rossendale and Darwen (Mr. Trippier), was most generous and magnanimous about giving his time to meet the people who are suffering the dire consequences of having bought these properties. He could not give the guarantees that I sought for those residents, but he took time out of his busy schedule when he paid a visit to Nottingham and when he saw me and some of the residents at his own Department. I thank him publicly for that, as I did at the time.
However, the current Minister has not had the courtesy to agree to such meetings, despite having come to Nottingham and despite me, several peers and residents having made offers to meet him at any time of his choosing. That offer still stands. If the Minister believes that I am making "wild allegations", I suggest that he looks at his English dictionary.
The Minister's decision not to meet those who have suffered the consequences of his policy has now, unfortunately, been supported or abetted in writing by the Prime Minister, who has excused her Minister from meeting these people. That does not reflect well on the Prime Minister, but I am not surprised that the Government are ashamed to meet many Members of this House and the other place and the residents, given their record on the issue. If I had done what the Government have done, I should be anxious to dodge direct talks with people who know the truth.
Even at this late stage I plead with the Minister-not with any great relish, but with whatever it takes. Once


again, whether it involves writing, attending meetings or appearing at his convenience—wherever he chooses and at whatever time he chooses—I, other hon. Members and peers who wish to meet him and all the residents offer to meet him. We ask the Minister please to meet us to hear what we have to say. The Minister need not give any undertaking to act after having met them, but we ask that he listens to the people who suffer because of the policies pursued by this Government and to their solutions on a way out of the problem. Those people feel that they have been sold a pup. It is the political and moral responsibility of the Government to do something about that. Thousands of people need assistance in this matter.
There is now a national campaign by residents of steel-framed houses. At one time, there were many small, isolated campaigns in every area where these properties had been built, but in the past year, as a result of the campaigning efforts of people such as Jane Locke, who has been the unpaid secretary of the campaign in my constituency, and as a result of her committee and its executive having pulled together at tremendous personal cost in terms of money and time, a national campaign to try to get some action to make the homes decent for the families has been established.
The campaign's most outrageous demand has been to be allowed to meet the Minister to put its point of view. We have been assisted ably—again, I must express my gratitude—by unpaid advice from professional people, such as surveyors, who have tried to help the campaign locally and nationally. We have also been assisted by the expert and helpful coverage given to the problem by the TV programme "Advice Shop". That was especially useful, because it helped people throughout the United Kingdom to realise that they were not alone. They had felt that they alone were getting a raw deal; suddenly they realised that many others were campaigning to try to get some justice done.
The Minister has said of BISF homes that they only need a lick of paint. Without wishing to criticise the Minister personally, I have to say that I feel that that was a most inappropriate comment given that people have been struggling for five years or more to try to get their problems solved. They know, and the Minister knows, that a lick of paint will not help if the cladding is falling off a house. That comment is an insult to those who have worked hard to rectify matters, often at great personal expense. It may have made the Minister feel good for a few passing moments but it did not help those who had to go back to BISF homes.
Apparently, the Minister sees fit to chuckle about it; he thinks that it is funny. I understand that in his own city the properties have been renovated at a cost of £20,000—

Mr. Frank Cook: Each?

Mr. Allen: Yes, £20,000 each. Perhaps in the Minister's constituency that is the price of a lick of paint, but that is certainly not the case in Nottingham.
Perhaps, now that the problem has been solved on his own patch, the Minister can afford to smile from ear to ear, but I would ask him to face up to his wider national responsibilities in this case and to bear in mind all those throughout the country whose houses need more than a lick of paint and who would welcome the prospect of £20,000 being spent on their properties to bring them up to the standards that they deserve.
This issue is not local to the Minister's constituency or, indeed, to mine. A meeting held in the Palace was jam-packed with representatives of the campaign from Scotland, Wales, the midlands, the south, the north-east and the north-west. The meeting was addressed by my hon. Friends the Members for Pontypridd (Dr. Howells), for Barnsley, West and Penistone (Mr. McKay) and for Durham, North-West (Ms. Armstrong) and by my right hon. Friend the Member for Blaenau Gwent (Mr. Foot). My right hon. Friend the Member for Doncaster, Central (Mr. Walker) also put in a brief appearance, despite his other duties in the House, as did my hon. Friend the Member for Dundee, East (Mr. McAllion).
Numerous other hon. Members, who wished to attend but could not, sent letters to say that they fully supported the campaign. Members of the other place—notably Lord Graham of Edmonton and Lord Dormand—also appeared, not to speak but to show their support. It is a widespread national campaign that will not go away. Will the Minister please look at the matter afresh, take cognisance of residents' views and meet those who attended the meeting, who seek to represent their constituents' views?
The Minister may say that the building societies are lending on the properties. In my constituency, only the Abbey National and the Halifax have lent on the properties and they have done so on a specific, one-off basis. They have lent money on the properties but not at market value. They have been prepared to lend on them only at knockdown prices—sometimes £20,000 less than the real market value of the properties. Building societies are not treating those properties as ordinary homes. Even if the Minister seeks to convince the House that these properties are not defective, building societies are talking with their money. They are saying, "We will not lend the full market value for these properties. We have enough suspicions to feel that these properties should be valued at far less than their market price—sometimes at £20"000 less."
I ask the Minister to bear in mind the Scottish Office report stating that there are inherent defects in such properties. This is not a recent development. That Scottish Office report was published in 1976. The Minister may try to convince us that the building research establishment is fully cognisant of what is happening in relation to these properties and that it feels that there are no defects. I ask it and him to explain the Scottish Office report and to accept that the properties, allegedly have a history of defects and problems.
That is why the Britannia building society has stated that it is "not a long-term security" for any loan. That is why the TSB has stated:
We cannot grant a mortgage because of the construction
of the properties.
That is why, when the Bilborough residents, other people in my constituency and the national representatives visited the headquarters of the Woolwich Equitable building society, they were told that the Government were to blame for this because the right to buy was initiated by and rests with the Government. The Woolwich said that BISF homes should be on the housing defects lists under the Housing Defects Act 1984. Those views were expressed directly to the representatives of BISF home owners by a major building society.
What do the residents want? Do they want to be completely rehoused at public expense? Do they want


some sort of outrageously extravagant treatment? No. The most that they are asking for is that the Housing Defects Act should include their homes on the list of defective houses, on what is called the "designated list".
What effect would it have if those houses were included on the list? It would mean one of two things. First, it could mean that the council could repurchase those homes at 95 per cent. of the defect-free value, if it chose to do so. Of course, many councils would not choose that option, especially in the light of the cuts in expenditure on the housing revenue and housing investment programmes that the Government have instituted. The second option under the Act would be a 75 per cent. reinstatement grant, most of which, I understand, would be met by the Government and a percentage of which would be met by the council.
I am pleased that my hon. Friend the Member for Barnsley, West and Penistone has now joined us in the Chamber. He was one of the most vociferous of those attending the meeting to which I have referred, defending his constituents' interests. Several individuals, delegates and representatives came down to the meeting from his constituency and have been extremely active in maintaining the national organisation. I thank my hon. Friend for his continued interest in this matter.
I should like to refer to another matter that aggravates the problems of people who live in these steel-framed houses. In my constituency, those that are still owned by the council have been the subject of a number of repair programmes. People well into advanced age became home owners when they were offered apparently cheap houses, which they could resell or pass on to their children. A dream was held out to them: "Put something aside. Buy now, and you will be able to pass on a marvellous asset." Many people aged 70, 75, or even older, who bought their homes now find that the roof is inadequate, the cladding is falling off, and the structure is exposed and is being eaten by corrosion. Next door, they see council workmen renovating and repairing. Perhaps painters are providing what the Minister would describe as a lick of paint—perhaps even a £20,000 lick of paint, as in Southampton.
Suppose that the owners of such a house put an estate agent's sign in their garden. Somebody driving past sees on one side a sparkling, renovated, polished-up council home that looks brand new, and on the other side a shabby, shambling wreck that has no hope of attracting a mortgage? What would be the reaction of a prospective buyer? Clearly a very large number of people have bypassed these properties, have gone elsewhere. Even if someone offers to buy, there remains the question of securing a mortgage.
Almost without exception the parties involved in this very sad tale have done their level best to achieve a solution. I do not normally name civil servants, but I have to say that Mr. Godfrey Meynell has done his level best to secure justice for these people. The city of Nottingham council has also done its best to secure a just deal, and I hope that I have managed to make a small contribution to the campaign. Even the Minister's predecessor—the hon. Member for Rossendale and Darwen—did all he could at least to explain the Government's position to the people trapped in these homes. Had he managed to retain his

post, we might have made more progress. The current Minister must accept much of the responsibility for the current inactivity.
I ask the Minister again to consider the problem afresh and to offer these people some hope. I will continue to raise the matter. It was raised during the debate on the Third Reading of the Housing Act 1988, and it has been raised in a number of other places. When the Minister's predecessor was involved, there was at least an attempt to understand the difficulty, rather than a gruff, stark refusal to consider any of the ways forward that are being offered by tenants and residents. The then Minister for Housing and Planning, in a letter of 11 July 1988—quite a long time ago, since which time we have seen a number of changes—said:
I know that you have been in correspondence with Marion Roe"—
then a Minister—
on this subject and that her last letter to you dealt very fully with the ways in which we are trying to ensure that surveyors and valuers have proper technical information on non-traditional houses on which to base their survey reports. Often, we find that where there is uncertainty a meeting with BRE experts and officials from the Department can help move things forward, so when the owners have supplied you with details of the lending institutions who appear to be taking this attitude, we shall certainly do all we can to help.
That was in response to my letter of 4 July.
In his brief intervention, the Minister mentioned that he had written to me and had offered a visit to the BRE. He omitted to mention—it is something of a habit of his to give half the story, and I feel that it is incumbent upon me to give the other half—

Mr. Kenneth Carlisle (Lords Commissioner to the Treasury): Why is that?

Mr. Allen: The Government Whip is muttering. I shall explain why I have to put my case in this way. For the past three or four years, I, as a parliamentary candidate and as a Member of this place, have sought to help my constituents, as all my right hon. and hon. Friends do. Unfortunately, in the past six months or so there has been a change of policy. There has been a change of heart on the Government Benches, and especially from the Minister.
The Chamber is the forum in which these issues should be aired. If the Minister were to seek to be helpful, courteous or generous, he would find an ample response from Opposition Members. It is no wish of mine to have to drag the Minister to the House to participate in an Adjournment debate, he having refused consistently to meet Members of this place and of the other place. An Adjournment debate is a Back-Bencher's last resort. I hope that those comments help to put the position into perspective.
It is no joy to me to have another Adjournment debate, to be talking about this matter again and to have a three-inch-thick file of correspondence from my constituents who are in BISF houses. I wish that the Minister would do the decent thing, meet my constituents in those houses and explain his position. Perhaps we could then make progress. Until we have a meeting, discussion and consultation, it will be difficult to make progress.
I hope that the other half of the Minister's story can now be told. When he wrote, he offered a meeting for myself with the building research establishment. My reply, which the Minister did not quote, was that I would be pleased to go to the BRE to examine its scientific basis for


saying that BISF houses were not defective, provided that I could be accompanied by one or more representatives of the residents of those houses. I do not intend to go to the BRE without the very people who asked me to take up the matter.
I hope that the Minister will acquiesce in my going to the BRE with, if it helps him, only one representative of the residents in the BISF properties. That is one person who has to live every day in such a property, one person who has studied the technical detail, one person whose house is falling around his ears, one who can cross-examine the expert at the BRE, whose representatives say that the properties are not defective.
On that basis, I tell the Minister that we could get into my car tonight to go to the BRE, if that would help. I shall not go without those who have raised the initial query. The full story should be told. That having been done, Members of this place might come to a slightly different judgment on the Minister's smear attempt earlier this evening.
There are many other areas where problems could be highlighted, and there are some simple things that could be done. First, there could be a review of the designated houses. Will the Minister consider the possibility of further designation where it can be proved that houses are defective? If that cannot he proved, it is incumbent upon the Government, they having encouraged people to buy these properties, to take strong steps to ensure that companies which offer mortgages do so on an even-handed and open basis where properties are not defective. It is an either/or situation and I feel that the Ministers should be able to come forward with one proposal or the other. I believe that either, while far from ideal, would satisfy many of the residents.

Mr. Allen McKay: It should also be taken into consideration that the Department not only encouraged people to buy but originally encouraged councils to build.

Mr. Allen: My hon. Friend makes an excellent point and I feel that it is one on which he may wish to elaborate—

It being Ten o'clock, the Motion for the Adjournment of the House lapsed, without Question put.

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Fallon.]

Mr. Allen: I was in the process of congratulating my hon. Friend the Member for Barnsley, West and Penistone (Mr. McKay) on his intervention. I feel that it is perhaps one that he may care to repeat when the Minister gets to his feet, in order to get some kind of sensible explanation from the Minister as to the current policy in respect of building council houses, because that is certainly the other part of the pincer in which people in my constituency, and I am sure in his, are being squeezed.
The Minister has not, in my view—I state it openly in the House—carried out his duties in a manner befitting his office. I ask him to reconsider his position—he may think that this is a laughing matter, but as we speak tonight there are thousands of people living in these places—in respect of meeting the people who are desperate for assistance because they have to live with these defects.
I finish on the point of what these defects mean to those people. Here is a brief list: corrosion on the main frames of these houses, obvious corrosion on the outside of these homes; roofs which are at the end of their natural life; and

lower cladding on the steel frame houses much of which is falling. I am very pleased to see my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) present, because he and many of his Scottish colleagues with steel-framed homes in their constituencies have supported this campaign throughout the whole of Scotland—notably my hon. Friend the Member for Dundee, East, who came along and presented a very strong case on behalf of his constituents facing similar problems.
The defect list continues. There is a strong suspicion of a fire risk in these properties which it could cost thousands of pounds to eliminate. One estimate is that simply to eliminate the fire risk could cost up to £20,000. That is not necessarily my view as an individual; I claim no expertise in the surveying field. But certainly the Nationwide Anglia Building Society, before granting a mortgage, requested the following changes: the removal and replacement of a roof; fire stops between dwellings; the replacement of corroded steel frames and bolts and a number of other steel parts; the replacement of flues and cowlings where corroded; a vapour barrier to prevent further corrosion. That was all before consideration of the offer of a mortgage.
The Minister cannot have it both ways. That is a clear list of the major defects from which some of these properties are alleged to suffer. I ask the Minister not to take my word for it, but to meet with the residents from my constituency in Bilborough and elsewhere throughout the country, and/or to meet Members for constituencies that I have named this evening and peers from the other place who have sought to represent the interests of those in their areas, and to hear from them at first hand.
It may be a lost cause, but I appeal to the Minister, finally, to listen to those people and to do so with an open mind. If he agrees to do that, he may begin to earn the respect of a wider audience than he currently has.

The Parliamentary Under-Secretary of State for the Environment (Mr. Christopher Chope): I am afraid that we have been treated to a rather intemperate speech from the hon. Member for Nottingham, North (Mr. Allen), which has extended to almost 40 minutes. I hope that, in the time remaining, I can do something to redress the balance. I hope that the hon. Gentleman will reflect carefully on whether his comments will help or hinder the position of home owners on the Bilborough estate.
I listened carefully to what the hon. Gentleman said, but I must say that he has rasied no new points. He referred to the work on this issue carried out by my hon. Friend the Member for Rossendale and Darwen (Mr. Trippier), who was then the responsible Minister and is now the Minister for the Environment and Countryside. I share the hon. Gentleman's appreciation of my hon. Friend's work.
However, I am concerned that the hon. Gentleman does not appear to be prepared to accept either the findings of the building research establishment or the fact that my hon. Friend secured a splendid undertaking from the Abbey National and the Halifax building societies, confirming that their national lending policies made no distinction between BISF houses and those of traditional construction. The hon. Gentleman made some allegations about those building societies, so I must tell the House that


they are prepared to lend on such houses on normal terms. To suggest otherwise can only be counter-productive and make those houses less marketable.
I wish to set out the wider background to the issue, and to place the concerns of this particular estate within the overall context of non-traditional housing in the United Kingdom. There are just over a million dwellings of non-traditional construction built to named systems. The majority of them are houses, built after the second world war in response to the overwhelming need for new homes and the desperate shortage of traditional building materials and skilled craftsmen. When built, those houses set new standards of space and layout. Some of them, like the BISF, incorporated novel features such as central heating and improved insulation. At the time they were built, they were novel features. As a result, they have generally proved popular with tenants, who appreciate their generous space standards and often sizeable gardens. They have exercised their right to buy in fairly large numbers.
However, in the early 1980s the building research establishment discovered serious problems with a number of prefabricated reinforced concrete houses designed before 1960. Those problems related to changes in the chemical composition of the concrete, and although in most cases there was no immediate risk of structural failure, it meant that the useful life of those houses was now known to be significantly shorter than when they had been valued for sale under the right to buy.
As a result, owners who had bought in good faith experienced a substantial loss in value, and in 1984 the Government, with all-party support, brought in the housing defects legislation to ensure that they could be assisted, either by reinstatement work, or by repurchase. The hon. Gentleman may be interested to know that I had the privilege of serving on the Standing Committee that considered that Bill. I took a great interest in the issue, because a number of my constituents occupy such houses.
Although those houses represented less than a fifth of the total non-traditional stock, lending institutions understandably reacted at the time with considerable caution to mortgage applications for any non-traditional house. Their surveyors were, by and large, unfamiliar with the systems of construction employed and with methods of inspection and assessment that would allow them to consider them on their individual merits.
The Department asked the BRE to conduct a comprehensive study of all types of non-traditional dwelling, in order to provide authoritative advice to owners and building professionals on methods of construction and on good practice in inspection, asessment, maintenance, repair and improvement. That study is now drawing to a close. The BRE has looked at all the major types, representing some 90 per cent. of non-traditional houses in the country, and has concluded that, overall, their performance in use is likely to be much the same as that of brick-built houses of the same age.
Of course there are exceptions, but such isolated types, with serious inherent defects which could not have been known at the time they were sold, have all long since been designated under the housing defects legislation. With

other types, we expect owners to make proper provision for repair, maintenance and improvement, just as they would for houses of more traditional construction.
The legislation was never intended as an escape route from the normal responsibilities of home ownership. Where owners have genuine problems in coping with the cost of essential repairs, and are unable to finance them through bank loans; say, or re-mortgage, the new house renovation grant scheme should help, but we see no need for special treatment simply because a house does not happen to be made of brick.

Mr. Allen McKay: rose—

Mr. Chope: I will give way in a moment, but not just now.
It is in this context that we need to look at the situation of owners of BISF houses like those on the Bilborough estate. These houses are now over 40 years old. In common with other, traditional, houses built at that time, their heating, insulation, kitchen and bathroom standards are lower than we would expect in houses built today. They need regular maintenance and renewal like any other houses, and their roofs, in particular, are coming to the end of their useful life.
However, the valuations at which they were sold would have taken into account all these factors, which were readily apparent on survey; and in general across the country we find that these houses have found their level in the open private sector market without much difficulty. Indeed, I understand that the chairman of the Bilborough Owners Association, Jane Locke, far from buying under the right to buy, bought her own house in just this way, presumably with the benefit of a survey. She bought that house in the open private market.
Like other non-traditional houses elsewhere, BISF houses in Nottingham were affected for a time by uncertainties in the market. The city council did its best to help by stripping down half a dozen of its own properties to show that they had no structural problems; and in 1987 the building research establishment published a comprehensive report which showed that the majority of BISF houses were structurally sound, and that, where repairs were needed—chiefly in areas of high exposure near the coast—these could be carried out in a relatively straightforward and cost-effective manner. On the basis of their findings, we saw then, and see now, absolutely no reason to designate under the housing defects legislation.
I fear that it is the report from the building research establishment which the hon. Member for Nottingham, North and some of his constituents are still not prepared to accept, yet it is the report of experts on this issue. I hope that in due course it will be accepted, even perhaps by the hon. Gentleman.
By the end of 1988, it seemed clear that market confidence was returning, and it was therefore with some surprise that my hon. Friend the Member for Rossendale and Darwen learned from the hon. Member for Nottingham, North that there were apparently still difficulties with mortgageability on the Bilborough estate. He undertook to sound out the major lending institutions, and in May of last year he was able to announce to the House that the Halifax and the Abbey National had confirmed that they continued to lend on BISF houses in


Nottingham, as elsewhere, on normal terms, and to re-mortgage where repairs and improvements were needed.
However, they had also pointed out that market sentiment could be badly affected by inaccurate statements about health and safety made in the media and elsewhere—a concern that the hon. Gentleman then, at least, seemed to share; to judge from his letter to my hon. Friend dated 19 December 1988, in which he deplored loose talk about "defects" and "designation". It is, unfortunately, a fact that the Bilborough owners association has seen fit to circulate a stream of highly misleading material, suggesting that BSIF houses are fire traps, an allegation repeated tonight by the hon. Member for Nottingham, North, that the existing asbestos-cement roofs are a health hazard, and that prospective purchasers would be ill advised to buy. I cannot stress too strongly that there is not a shred of evidence to support these claims, and that it is foolhardy in the extreme for owners who wish their houses to achieve a proper market value to talk down their properties in this way. For any hon. Member to aid and abet that is also irresponsible.

Mr. Allen: Will the Minister specify where I have sought to label these houses fire traps? Is he not really falling into his trap of talking down these properties by using such extreme language? I have not referred to these houses as fire traps, and it is rather ill advised of the Minister to come up with such language. Does he not realise that we should all be trying to seek a solution to this problem?

Mr. Chope: I welcome the hon. Gentleman's amazing change of mood, and I am glad that he now sees the need to be responsible about the matter. The record will show exactly what he said in his speech about the fire hazards associated with such houses.

Mr. Allen: We do not need the record. I will tell the Minister again what I said, as obviously he was not listening—or he was having a joke with one of the Whips, as he did several times during my speech. I said that, before considering a mortgage on a given property, the Nationwide Anglia building society had requested that a firebreak be put into the property, at great expense. That is different from saying that all the houses are fire traps. They are not, and should not be so portrayed.

Mr. Chope: I am glad that the hon. Gentleman accepts that. One of the difficulties has been that a fire had taken place in one of the houses on the estate. People suggested that it was because of the structure of the building. The hon. Gentleman will know that a detailed report was carried out by Howard Ward Associates for Nottingham city council, which concluded that there was no structural problem with the house. It said:
We see no structural reason why the property should not be considered as suitable security for mortgage purposes. There are no above-average structural and fire insurance risks in the property. The steel frame in fact provides better protection against superstructure damage in the event of foundation movement and subsidence damage risk may therefore be lower than average. There are no reasons to suspect that the structural condition of the property is other than typical of that found in the BISF houses elsewhere.
That report is apparently not accepted by everyone on the estate. That is a pity, as it has only resulted in the houses having a lower value in the marketplace than they would otherwise have had.

Mr. Allen McKay: rose—

Mr. Chope: I must continue, as it is the hon. Member for Nottingham, North's Adjournment debate, but if there is time at the end, I will give way to the hon. Gentleman.
One of the allegations is that owners face substantial repair bills—the hon. Gentleman said that they amounted to some £20,000. That is nonsense. Any unimproved house over 40 years old, whatever its construction, could well need substantial expenditure to bring it completely up to modern performance standards. But Professor Hollis, who surveyed one of the Bilborough houses on behalf of the owners, has confirmed to the Department that no structural repairs were found to be necessary—apart from those needed to cope with injudicious alterations carried out by the owner—and that he would expect to see essential renewal and maintenance work to any house of that age cost no more than £7,000. That, of course, is exactly what Nottingham city council has found in work to its own houses on the estate.
Indeed, after my hon. Friend's announcement, one of the major clearing banks approached the Department expressing some concern that the question of designation under the housing defects legislation had even been raised. Like other lending institutions, the banks treat mortgage applications for steel-framed houses like the BISF on their merits, just like traditional houses, and can see no justification whatsoever for suggestions that they are defective.
That is the position today. BISF houses generally command a fair price in the market. At Bilborough, major lending institutions stand ready to advance mortgages. The estate is an attractive one, and the city council is showing its confidence in the houses by an improvement programme to its property in which it is replacing roofs, windows and guttering. It has offered owners the opportunity to join in with the once-for-all chance to catch up on past maintenance at a specially low price of just over £6,000.
The hon. Gentleman referred to the contrast between a house that had been improved by Nottingham city council and one that had not. If the owner of a house adjoining one owned by Nottingham city council wishes to participate in the scheme, participation comes at the relatively modest price of just over £6,000. A number of owners have already expressed interest in that offer. For those owners with low incomes a further opportunity exists: if their houses require it and their means warrant it, they could qualify for grant-aided repairs under the new system of house renovation grants.
Owners generally need to avoid problems of their own making. They must care for their properties and take the opportunities when they arise to enhance them and not to run them down. The city council, the lending institutions and my Department all take a positive view of these houses. Only a small and vociferous group of owners, for reasons best known to themselves, apparently wish to encourage blight. If they think that by doing so they can attract large sums of taxpayers' money, they are severely mistaken. I hope that, as a result of this debate, they will think carefully about the consequences of their actions.
I have invited the hon. Gentleman on more than one occasion to organise a visit of parliamentarians to the building research establishment, where they would have


the opportunity to talk to the technical experts who carried out research on BISF houses and on whose advice the Government's policy is based.
I am surprised that the hon. Gentleman is not prepared to take up that invitation. His hon. Friend the Member for Leeds, West (Mr. Battle) went on such a visit and found it helpful. He did not find it necessary to take anybody with him from the estate. He went there and used his own judgment as an intelligent Member of the House. The hon. Member for Nottingham, North is perfectly capable of assessing the expert advice that he would receive if he went to the BRE.
I fear—I speculate on this point—that the hon. Gentleman is frightened that, when he goes to the BRE, he too will be convinced of the case that the BRE has made and that the onus will then be on him, as the hon. Member for the constituency involved, to pass that judgment on to some owners who have resolutely resolved not to accept the BRE advice under any circumstances. I hope that the hon. Gentleman will, like his hon. Friend the Member for Leeds, West, take up the offer to visit the BRE.

Mr. Allen: Why is the Minister afraid of his officials at the BRE meeting residents of the Bilborough estate, with or without my presence, to discuss their differing views on the technical problems of these homes?

Mr. Chope: I am not afraid of anything. The BRE is an independent technical establishment and time is very much at a premium, and if the hon. Gentleman visits the BRE he will appreciate that. When he is making his visit, he can, if he is not satisfied or wants additional information—bearing in mind that the report of the BRE has been published and is available to tenants—glean it from the BRE.
He can discuss with the officials there whether they would be minded to discuss, and see any merit in discussing, matters further with some of the tenants. I do not rule out what might happen if he visits the BRE and discusses this matter with the officials there, because I do no know what new points he will try to raise, but at this stage it would be better for him to accept the invitation that has been offered to visit the BRE, as his hon. Friend the Member for Leeds, West did, and to discuss with the experts the report which they produced.

Mr. Allen: I am anxious to get this absolutely clear for the record. Is the Minister once again precluding me from going to the BRE accompanied by a representative of the people who are suffering this problem?

Mr. Chope: I am saying that the invitation for him to visit the BRE is for him to go as a parliamentarian with any other parliamentary colleagues he wishes to take with him, but that the invitation does not extend to ordinary members of the public. As I said, if he goes to the BRE, he can no doubt discuss with the experts there the relative reasons why it may or may not be desirable for other people to be brought forward on a subsequent occasion. I hope that the hon. Gentleman will take up that offer. His hon. Friend the Member for Leeds, West did not seek to put conditions on his visit to the BRE.
Most hon. Members—indeed, most members of the general public—have a high regard for the work of the BRE and would be glad of the opportunity to go there and

discuss the technical side of the matter with the experts. I am sorry that the hon. Gentleman has so far turned down that offer. I am sure that in due course he will respond to it because, if he does not do so, I do not see how he could communicate to his constituents the discussions that he would have been able to have with the BRE.

Mr. Allen: Since the Under-Secretary seems to be coming to the end of his remarks, will he consider the suggestion that I made earlier—that he should meet hon. Members who have such problems in their constituencies—both Members of this House and of the other place? Would the Minister, at his own convenience, whenever he chooses, meet those people?

Mr. Chope: The answer to that has been clearly set out in the letters that I have written to the hon. Gentleman and that my right hon. Friend the Prime Minister has written. Obviously, if new issues were raised, Ministers are prepared to have meetings to discuss them. However, nothing that the hon. Gentleman has said tonight, or in his correspondence, suggests that he has any new points to raise. He merely wishes to go over old ground—over matters which he discussed with my predecessor. There is no point in my having meetings to go over ground that was explored a short time ago with a former Under-Secretary of State for the Environment.

Mr. Allen McKay: I do not think that any hon. Member here tonight has said that the houses we are discussing are fire hazards because they catch fire more quickly than any other house. However, it is a fact that fire spreads more quickly in such houses, and that is the reason that architects have advised that a fire stop should be put into the apex of the house to ensure that fire does not spread from one side to another.
The Under-Secretary concentrated in his speech on the structural defects of such houses. I do not know whether he has seen any of the houses which are in the worst condition. It is no fault of the tenant through lack of maintenance. It is sheer lack of finance that has caused the condition. They bought something, but they did not realise that it would be a considerable drain on their finances.
In 1971, architects in my constituency, in consultation with the Department of the Environment, realising that they were throwing good money after bad, stripped down a number of these houses and bricked them through instead of cladding them on the inside. Cladding can cause grave problems and does not foster good housekeeping, and the best people can get depressed living in such conditions.
I believe that the Government must consider what help they can give. Perhaps a partnership between the local authority, central Government, the householder and if necessary the building society would be a possibility. Unless we do something, the problem will remain with us.

Mr. Chope: The hon. Gentleman mentioned a fire stop. That is also covered in the report by Howard Ward Associates. They said:
with regard to the combustibility of the property and the risk to occupants this does not appear to be significantly different from that found in traditionally built modern houses and, bearing in mind the effectiveness of the firestop, is undoubtedly better than in many other properties where party walls frequently do not extend into the roof voids.


Therefore, those independent experts, who were producing a report for Nottingham City council, found that there was no need for people to become alarmed about fire stops.
I hope that the past will be put behind residents who live on the estate, and that they will see that there is a good future for them, for their houses and for the marketability of their houses if they accept the findings of the building research establishment, and perhaps take advantage of the offers made by Nottingham city council. That council has behaved very responsibly in this matter at all times. I hope that the problem can be resolved happily for everyone, including the hon. Member for Nottingham, North, I hope that he will be more content in future.
I do not see any point in having meetings to discuss old ground unless the hon. Gentleman is prepared to discuss the matter with the BRE first. As a gesture of good will, if he goes to discuss the subject with the BRE and has points arising from that meeting that he wishes to discuss with me, I shall happily meet him.

Mr. Allen: I would like to conclude the last minute of the debate by saying how disappointed I am that, despite the gesture made by the Under-Secretary in the last sentence of his speech, he has rejected a meeting with hon. Members from this House and from the other place. I would gladly attend the BRE accompanied by someone who has suffered from this problem but, unfortunately, that visit has also been rejected by the Under-Secretary. In other debates, I might say that I would raise this matter in the Adjournment, but we are on the Adjournment and unfortunately we will have no satisfaction until there is a new Government.

The motion having been made at Ten o'clock and the debate having continued for half an hour, MADAM DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at half past Ten o'clock.